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Persistence in Financial Connectedness and Systemic Risk

Jozef Barunik, Michael Ellington

arXiv 14 Jul 2020 · Econometrics · publishedEuropean Journal of Operational Research (2023) · 47 citations (OpenAlex)

arXiv:2007.07842 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper characterises dynamic linkages arising from shocks with heterogeneous degrees of persistence. Using frequency domain techniques, we introduce measures that identify smoothly varying links of a transitory and persistent nature. Our approach allows us to test for statistical differences in such dynamic links. We document substantial differences in transitory and persistent linkages among US financial industry volatilities, argue that they track heterogeneously persistent sources of systemic risk, and thus may serve as a useful tool for market participants.

Citation extraction

61
references
91
in-text mentions
61
distinct cited
1
self-citations
13,790
main-text words

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Diebold, F. X. and K. Yilmaz (2014) On the network topology of variance decompositions: Measuring the connectedness of financial firms0.92843100%
2Li, Y., X.-B. Liu, and J. Yu (2015) A Bayesian chi-squared test for hypothesis testing0.81142100%
3Gabaix, X (2011) The granular origins of aggregate fluctuations0.73732100%
4Herskovic, B., B. Kelly, H. Lustig, and S. Van Nieuwerburgh (2020) Firm volatility in granular networks0.73732100%
5Petrova, K (2019) A quasi-Bayesian local likelihood approach to time varying parameter VAR models0.64441100%
6Acemoglu, D., V. M. Carvalho, A. Ozdaglar, and A. Tahbaz-Salehi (2012) The network origins of aggregate fluctuations0.64422100%
7Acemoglu, D., A. Ozdaglar, and A. Tahbaz-Salehi (2017) Microeconomic origins of macroeconomic tail risks0.64422100%
8Acharya, V. V., L. H. Pedersen, T. Philippon, and M. Richardson (2017) Measuring systemic risk0.64422100%
9Adrian, T. and M. K. Brunnermeier (2016) Covar0.64422100%
10Atalay, E (2017) How important are sectoral shocks?0.64422100%

Showing the top 10 of 61 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Structural Analysis of Vector Autoregressive Models0.40511