Abstract
Since 2007, several contributions have tried to identify early-warning signals of the financial crisis. However, the vast majority of analyses has focused on financial systems and little theoretical work has been done on the economic counterpart. In the present paper we fill this gap and employ the theoretical tools of network theory to shed light on the response of world trade to the financial crisis of 2007 and the economic recession of 2008–2009. We have explored the evolution of the bipartite World Trade Web (WTW) across the years 1995–2010, monitoring the behavior of the system both before and after 2007. Our analysis shows early structural changes in the WTW topology: since 2003, the WTW becomes increasingly compatible with the picture of a network where correlations between countries and products are progressively lost. Moreover, the WTW structural modification can be considered as concluded in 2010, after a seemingly stationary phase of three years. We have also refined our analysis by considering specific subsets of countries and products: the most statistically significant early-warning signals are provided by the most volatile macrosectors, especially when measured on developing countries, suggesting the emerging economies as being the most sensitive ones to the global economic cycles.
Highlights
Since 2007, several contributions have tried to identify early-warning signals of the financial crisis
With the aim of filling this gap, and complementing the existing vast amount of literature on financial markets, in the present paper we analyse the bipartite World Trade Web[15,16,17,18], by employing a novel method to assess the statistical significance of a number of topological network properties across the period 1995–201019: we focus on a recently-proposed class of bipartite motifs, studying their evolution across the aforementioned period
The truly crucial phase experienced by the World Trade Web (WTW) is represented by the quinquennium 2003–2007: the year 2007, as Fig. 2 illustrates, is the ending point of such a phase started earlier in time
Summary
Since 2007, several contributions have tried to identify early-warning signals of the financial crisis. During 2007 one of the most striking financial crises of the century has manifested itself This major event has motivated researchers and institutions to devote a large effort for better understanding economic and financial systems evolution, with the aim of detecting reliable signals on upcoming critical events enough in advance to allow regulators to plan effective policies to contrast and overcome them[1,2,3,4,5,6]. With the aim of filling this gap, and complementing the existing vast amount of literature on financial markets, in the present paper we analyse the bipartite World Trade Web (hereafter WTW)[15,16,17,18], by employing a novel method to assess the statistical significance of a number of topological network properties across the period 1995–201019: we focus on a recently-proposed class of bipartite motifs, studying their evolution across the aforementioned period.
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