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Working Paper
Costly Information Intermediation: Quality vs. Spillovers
Pinheiro, Roberto; Monte, Daniel (2024-12-05)
We analyze information intermediaries in large economies with costly information acquisition. Intermediaries face a trade-off between quality and dissemination speed. Both altruistic policymakers and profit-maximizing monopolists optimally choose to sample limited information, increasing the number of partially informed agents and enhancing spillovers despite slower information accumulation. Altruistic information-sharing bureaus minimize fees by inducing low provider default rates, while monopolist bureaus maximize fees through higher faulty service rates. Information trade resembles a ...
Working Papers , Paper 17-21R2

Working Paper
Making Friends Meet: Network Formation with Introductions
Siedlarek, Jan-Peter (2022-06-28)
This paper proposes a parsimonious model of network formation with introductions in the presence of intermediation rents. Introductions allow two nodes to form a new connection on favorable terms with the help of a common neighbor. The decision to form links via introductions is subject to a trade-off between the gains from having a direct connection at lower cost and the potential losses for the introducer from lower intermediation rents. When nodes take advantage of introductions, stable networks tend to exhibit a minimum amount of clustering. At the same time, intermediary nodes have ...
Working Papers , Paper 20-01R2

Report
Does central clearing reduce counterparty risk in realistic financial networks?
Garratt, Rod; Zimmerman, Peter (2015-03-01)
Novating a single asset class to a central counterparty (CCP) in an over-the-counter derivatives trading network impacts both the mean and variance of total net exposures between counterparties. When a small number of dealers trade in a relatively large number of asset classes, central clearing increases the mean and variance of net exposures, which may lead to increased counterparty risk and higher margin needs. There are intermediate cases where there is a trade-off: The introduction of a CCP leads to an increase in expected net exposures but this increase is accompanied by a reduction in ...
Staff Reports , Paper 717

Working Paper
The Interactions of Social Norms about Climate Change: Science, Institutions and Economics
Cabrales, Antonio; Sánchez, Angel; Ramos Muñoz, David; García, Manu (2024-11-08)
We study the evolution of interest in climate change among different actors within the population and how the interest of these actors affects one another. First, we document the evolution of interest for each actor individually, and then we provide a model of cross-influences between them. We estimate this model using a Vector Autoregression (VAR). We measure interest among the general public, the European Parliament, central banks, general interest science journals, and economics journals by creating a Climate Change Index (CCI) based on mentions of climate change in these domains. Except ...
Working Papers , Paper 2024-036

Working Paper
Collaboration in Bipartite Networks, with an Application to Coauthorship Networks
Zimmermann, Christian; Hsieh, Chih-Sheng; König, Michael D.; Liu, Xiaodong (2020-08-17)
This paper studies the impact of collaboration on research output. First, we build a micro founded model for scientific knowledge production, where collaboration between researchers is represented by a bipartite network. The equilibrium of the game incorporates both the complementarity effect between collaborating researchers and the substitutability effect between concurrent projects of the same researcher. Next, we develop a Bayesian MCMC procedure to estimate the structural parameters, taking into account the endogenous matching of researchers and projects. Finally, we illustrate the ...
Working Papers , Paper 2020-030

Working Paper
Bank Regulation and the Rise of Nonbank Intermediation
Brunetti, Celso; Frei, Christoph (2026-05-11)
We study the rise of nonbank financial intermediation and its implications for systemic risk. We develop a structural network model of banks and nonbank financial institutions (NBFIs) that decomposes intermediation into a capacity channel, driven by bank balance-sheet constraints, and a reliance channel, reflecting NBFI funding reliance. Using U.S. banking confidential supervisory data, we estimate key structural parameters and quantify both channels. We find that fluctuations in bank-NBFI intermediation are primarily explained by the reliance channel, with variation in NBFI fragility ...
Finance and Economics Discussion Series , Paper 2026-030

Report
Precautionary Demand and Liquidity in Payment Systems
Shin, Hyun Song; Afonso, Gara (2008-10-01)
In large-value real-time gross settlement payment systems, banks rely heavily on incoming funds to finance outgoing payments. Such reliance necessitates a high degree of coordination and synchronization. We construct a model of a payment system calibrated for the U.S. Fedwire system and examine the impact of realistic disruptions motivated by the recent financial crisis. In such settings, individually cautious behavior can have a significant and detrimental impact on the overall functioning of the payment system through a multiplier effect. Our results quantify the mutually reinforcing nature ...
Staff Reports , Paper 352

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