The Double-Edged Sword of Global Integration: Robustness, Fragility & Contagion in the International Firm Network

56 Pages Posted: 1 Jun 2017

See all articles by Everett Grant

Everett Grant

Federal Reserve Banks - Federal Reserve Bank of Dallas

Julieta Yung

Bates College

Date Written: 2017-05-01

Abstract

We estimate global inter-firm networks across all major industries from 1981 through 2016 and provide the first empirical tests for both robust (beneficial) and fragile (harmful) network behavior, relating firms' health with global integration. More connected firms are less likely to be in distress and have higher profit growth and equity returns, but are also more exposed to direct contagion from distressed neighboring firms and network level crises. Our analysis reveals the centrality of finance in the international firm network and increased globalization, with greater potential for crises to spread globally when they do occur.

JEL Classification: C3, F36, F61, G15

Suggested Citation

Grant, Everett and Yung, Julieta, The Double-Edged Sword of Global Integration: Robustness, Fragility & Contagion in the International Firm Network (2017-05-01). Globalization and Monetary Policy Institute Working Paper No. 313, Available at SSRN: https://ssrn.com/abstract=2978557 or http://dx.doi.org/10.24149/gwp313

Everett Grant (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Dallas ( email )

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States

Julieta Yung

Bates College ( email )

204 Lane Hall
2 Andrews Road
Lewiston, ME 04240
United States

HOME PAGE: http://https://sites.google.com/site/yungjulieta/

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