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Computing systemic risk using multiple behavioral and keystone networks: The emergence of a crisis in primate societies and banks

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  • Fushing, Hsieh
  • Jordà, Òscar
  • Beisner, Brianne
  • McCowan, Brenda

Abstract

What do the behavior of monkeys in captivity and the financial system have in common? The nodes in such social systems relate to each other through multiple and keystone networks, not just one network. Each network in the system has its own topology, and the interactions among the system’s networks change over time. In such systems, the lead into a crisis appears to be characterized by a decoupling of the networks from the keystone network. This decoupling can also be seen in the crumbling of the keystone’s power structure toward a more horizontal hierarchy. This paper develops nonparametric methods for describing the joint model of the latent architecture of interconnected networks in order to describe this process of decoupling, and hence provide an early warning system of an impending crisis.

Suggested Citation

  • Fushing, Hsieh & Jordà, Òscar & Beisner, Brianne & McCowan, Brenda, 2014. "Computing systemic risk using multiple behavioral and keystone networks: The emergence of a crisis in primate societies and banks," International Journal of Forecasting, Elsevier, vol. 30(3), pages 797-806.
    • Handle: RePEc:eee:intfor:v:30:y:2014:i:3:p:797-806
    DOI: 10.1016/j.ijforecast.2013.11.001
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    References listed on IDEAS

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    2. Derbyshire, James & Wright, George, 2017. "Augmenting the intuitive logics scenario planning method for a more comprehensive analysis of causation," International Journal of Forecasting, Elsevier, vol. 33(1), pages 254-266.

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