Germs, Social Networks and Growth

50 Pages Posted: 19 Sep 2012 Last revised: 21 Jul 2016

See all articles by Alessandra Fogli

Alessandra Fogli

Leonard N. Stern School of Business - Department of Economics

Laura Veldkamp

New York University - Stern School of Business; National Bureau of Economic Research (NBER)

Date Written: July 12, 2016

Abstract

Does the pattern of social connections between individuals matter for macroeconomic outcomes? If so, where do these differences come from and how large are their effects? Using network analysis tools, we explore how different social network structures affect technology diffusion and thereby a country's rate of growth. The model also explains how different social networks may emerge endogenously in response to the prevalence of infectious disease. Initial differences in disease prevalence can produce different network structures, leading to divergent levels of income. We compare calibrated model predictions with data. The model and data agree that a one-standard-deviation increase in our index of network diffusion speed results in output growth that is 1/2% higher per year.

Keywords: growth, development, technology diffusion, economic networks, social networks, pathogens, disease

JEL Classification: E02, O1, O33, I1

Suggested Citation

Fogli, Alessandra and Veldkamp, Laura, Germs, Social Networks and Growth (July 12, 2016). NYU Working Paper No. 2451/31611. Available at SSRN: https://ssrn.com/abstract=2149067

Alessandra Fogli (Contact Author)

Leonard N. Stern School of Business - Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States
212-998-0872 (Phone)

Laura Veldkamp

New York University - Stern School of Business ( email )

44 West 4th St. - Suite 7-180
New York, NY 100012
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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