Identification and Robustness in Central Banking and Supply Chain

In this thesis, we study identification and robustness issues in central banking and supply chains. First, we present a methodology to identify multiple linear financial networks when only an aggregate outcome is observed, and use the method to assess financial networks among financial institutions...

Full description

Bibliographic Details
Main Author: Jiang, Bomin
Other Authors: Dahleh, Munther A.
Format: Thesis
Published: Massachusetts Institute of Technology 2022
Online Access:https://hdl.handle.net/1721.1/140001
https://orcid.org/0000-0002-8140-8416
_version_ 1826218017170653184
author Jiang, Bomin
author2 Dahleh, Munther A.
author_facet Dahleh, Munther A.
Jiang, Bomin
author_sort Jiang, Bomin
collection MIT
description In this thesis, we study identification and robustness issues in central banking and supply chains. First, we present a methodology to identify multiple linear financial networks when only an aggregate outcome is observed, and use the method to assess financial networks among financial institutions in the United States. We discover that the data is better explained by a mix of distinct networks, each of which corresponds to a different transmission mechanism. Second, we investigate the effect of bounded uncertainty in central banking, and derive robust decision rules for central banking policymaking. When bounded uncertainty is passed through a conditional expectation channel, we find that committing not to use a policy tool is sometimes optimal for the central bank. An asset purchasing model and a forward guidance model are examined in depth to illustrate our point. Third, we study a stylized supply chain model where large aggregate shock hits and prices are not adjusted due to anti-price gouging laws. We show that individual producers, in this case, will not diversify for aggregate shock due to the externality of fixed prices. Multinational corporations, on the other hand, would still diversify their supply chain due to continuation value. Furthermore, a robustness analysis shows that individual producers will not diversify even when they adopt robust decision rules, but multinational corporations will further diversify their supply chain in this case. The first two chapters tackle the real-world challenge of financial systemic risk reflected by the 2008 financial crisis, and the proliferation of monetary policy tools thereafter. The third chapter tries to analyze the supply chain disruption caused by the outbreak of the Covid-19 global pandemic, and give policy suggestions based on our model.
first_indexed 2024-09-23T17:12:50Z
format Thesis
id mit-1721.1/140001
institution Massachusetts Institute of Technology
last_indexed 2024-09-23T17:12:50Z
publishDate 2022
publisher Massachusetts Institute of Technology
record_format dspace
spelling mit-1721.1/1400012022-02-08T03:00:52Z Identification and Robustness in Central Banking and Supply Chain Jiang, Bomin Dahleh, Munther A. Rigobon, Roberto Massachusetts Institute of Technology. Institute for Data, Systems, and Society In this thesis, we study identification and robustness issues in central banking and supply chains. First, we present a methodology to identify multiple linear financial networks when only an aggregate outcome is observed, and use the method to assess financial networks among financial institutions in the United States. We discover that the data is better explained by a mix of distinct networks, each of which corresponds to a different transmission mechanism. Second, we investigate the effect of bounded uncertainty in central banking, and derive robust decision rules for central banking policymaking. When bounded uncertainty is passed through a conditional expectation channel, we find that committing not to use a policy tool is sometimes optimal for the central bank. An asset purchasing model and a forward guidance model are examined in depth to illustrate our point. Third, we study a stylized supply chain model where large aggregate shock hits and prices are not adjusted due to anti-price gouging laws. We show that individual producers, in this case, will not diversify for aggregate shock due to the externality of fixed prices. Multinational corporations, on the other hand, would still diversify their supply chain due to continuation value. Furthermore, a robustness analysis shows that individual producers will not diversify even when they adopt robust decision rules, but multinational corporations will further diversify their supply chain in this case. The first two chapters tackle the real-world challenge of financial systemic risk reflected by the 2008 financial crisis, and the proliferation of monetary policy tools thereafter. The third chapter tries to analyze the supply chain disruption caused by the outbreak of the Covid-19 global pandemic, and give policy suggestions based on our model. Ph.D. 2022-02-07T15:18:17Z 2022-02-07T15:18:17Z 2021-09 2021-10-20T22:21:40.242Z Thesis https://hdl.handle.net/1721.1/140001 https://orcid.org/0000-0002-8140-8416 In Copyright - Educational Use Permitted Copyright MIT http://rightsstatements.org/page/InC-EDU/1.0/ application/pdf Massachusetts Institute of Technology
spellingShingle Jiang, Bomin
Identification and Robustness in Central Banking and Supply Chain
title Identification and Robustness in Central Banking and Supply Chain
title_full Identification and Robustness in Central Banking and Supply Chain
title_fullStr Identification and Robustness in Central Banking and Supply Chain
title_full_unstemmed Identification and Robustness in Central Banking and Supply Chain
title_short Identification and Robustness in Central Banking and Supply Chain
title_sort identification and robustness in central banking and supply chain
url https://hdl.handle.net/1721.1/140001
https://orcid.org/0000-0002-8140-8416
work_keys_str_mv AT jiangbomin identificationandrobustnessincentralbankingandsupplychain