Network Theory in Macroeconomics and Finance

Abstract

In the last couple of years, a large body of theoretical and empirical work has been done emphasizing the network structures of economies. Availability of large data and suitable tools have made such a transition possible. The implications of such work is also apparent in settling age-old debates of micro versus macro foundations and to model and quantify shock propagation mechanisms through the networks. Here I summarize a number of major topics where significant work has been done in the recent times using both physics-based and economics-based models of networks and show that they are complementary in approach.