Working papers

• Friend-of-a-Friend in Production Networks: Micro Estimates and Macro Implications, 2025 (with Makoto Nirei), submitted to Journal of Political Economy

  • We quantify the friend-of-a-friend effect in production networks, where shared partners act as relational capital facilitating new links. We develop a general equilibrium (GE) model that endogenizes link formation and incorporates the friend-of-a-friend mechanism. We show the model reduces to a dyad-level logit specification, enabling estimation via a quadruple-based conditional logit. Using Japanese firm-to-firm transaction data, we find a sizable friend-of-a-friend effect, comparable in magnitude to the effects of geographical distance and sectoral proximity. Counterfactual simulations in a calibrated GE model indicate that eliminating the mechanism reduces aggregate output by 0.6% and reshapes firm-level shock propagation by changing network topology.

• Delayed Network Formation of Young Firms: Micro Estimates and Macro Consequences, 2025 (with Makoto Nirei), submitted to Journal of Political Economy Macroeconomics

  • This paper documents the delayed network formation of young firms and quantifies its macroeconomic consequences. Leveraging Japanese firm-to-firm transaction data, we show that young firms accumulate supplier and buyer relationships only gradually after entry, even controlling for standard age-related growth determinants. A calibrated general equilibrium model incorporating firms’ network-formation decisions reveals age-decaying networking wedges that raise entrants' effective supplier- and buyer-acquisition costs by 23% and 9%, respectively. Eliminating these wedges removes the post-entry networking delay, raises welfare and entry. Yet average partners per firm can fall: increased firm mass compresses average firm scale and reduces the return from each link.

• Disentangling Supply and Demand Shocks in a Networked Economy, 2025 (with Daisuke Fujii and Taisuke Nakata), submitted to Economic Modelling

  • We develop a multi-sector general-equilibrium model with production networks that can be used to identify sector-level supply and demand shocks from observed price and output data. In our model, decreasing returns to scale in production create an upward-sloping supply curve at the sector level. Applying our model to the COVID-19 crisis in Japan, we find that negative demand shocks were the key driver of the economic downturn in 2020 and that negative supply shocks mitigated the decline in prices. We also find that sector-level demand stimulus can increase real GDP and that its effects depend importantly on targeted sectors.