NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Germs, Social Networks and Growth

Alessandra Fogli, Laura Veldkamp

NBER Working Paper No. 18470
Issued in October 2012
NBER Program(s):   DEV   EFG

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.

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This paper was revised on August 1, 2016

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Document Object Identifier (DOI): 10.3386/w18470

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