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Analyses of aggregate fluctuations of firm production network based on the self-organized criticality model

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  • Hiroyasu Inoue

    (University of Hyogo)

Abstract

This study examines how consecutive productions in firms occur when triggered by demand shocks, which can be rephrased by control of the economy or fiscal policy. We use the production-inventory model and observed data that exhaustively include a production network of Japanese firms. We obtain the following results. (1) The size of consecutive productions follows a power law. (2) The mean sizes of consecutive productions for industries are diverse; however, their standard deviations are sufficiently large that the difference in the mean become less important. (3) We compare the simulation with an input–output table and with the actual policies; they are compatible.

Suggested Citation

  • Hiroyasu Inoue, 2016. "Analyses of aggregate fluctuations of firm production network based on the self-organized criticality model," Evolutionary and Institutional Economics Review, Springer, vol. 13(2), pages 383-396, December.
    • Handle: RePEc:spr:eaiere:v:13:y:2016:i:2:d:10.1007_s40844-016-0052-3
    DOI: 10.1007/s40844-016-0052-3
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    References listed on IDEAS

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    1. Bak, Per & Chen, Kan & Scheinkman, Jose & Woodford, Michael, 1993. "Aggregate fluctuations from independent sectoral shocks: self-organized criticality in a model of production and inventory dynamics," Ricerche Economiche, Elsevier, vol. 47(1), pages 3-30, March.
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    6. Y. Fujiwara & H. Aoyama, 2010. "Large-scale structure of a nation-wide production network," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 77(4), pages 565-580, October.
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    Cited by:

    1. Inoue, Hiroyasu & Todo, Yasuyuki, 2017. "Firm-level simulation of supply chain disruption triggered by actual and predicted earthquakes," MPRA Paper 82920, University Library of Munich, Germany, revised 22 Feb 2017.
    2. Hiroyasu Inoue & Yasuyuki Todo, 2019. "Propagation of negative shocks across nation-wide firm networks," PLOS ONE, Public Library of Science, vol. 14(3), pages 1-17, March.

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    More about this item

    Keywords

    Aggregate fluctuation; Demand; Network; Firm; Production; Inventory;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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