arXiv 15 Apr 2026 · physics.soc-ph
arXiv:2604.13890 · PDF · DOI · OpenAlex · Extracted main text
Why do capitalist economies recurrently generate crises whose severity is disproportionate to the size of the triggering shock? This paper proposes a structural answer grounded in the evolutionary geometry of production networks. As economies evolve through specialization, integration, and competitive selection, their inter-sectoral linkages drift toward configurations of increasing geometric fragility, eventually crossing a threshold beyond which small disturbances generate disproportionately large cascades. We introduce Sandpile Economics, a formal framework that interprets macroeconomic instability as an emergent property of disequilibrium production networks. The key state variable is the Forman--Ricci curvature of the input--output graph, capturing local substitution possibilities when supply chains are disrupted. We show that when curvature falls below an endogenous threshold, the distribution of cascade sizes follows a power law with tail index $α\in (1,2)$, implying a regime of unbounded amplification. The underlying mechanism is evolutionary: specialization reduces input substitutability, pushing the economy toward criticality, while crisis episodes induce endogenous network reconfiguration and path dependence. These dynamics are inherently non-ergodic and cannot be captured by representative-agent frameworks. Empirically, using global input--output data, we document that production networks operate in persistently negative curvature regimes and that curvature robustly predicts medium-run output dynamics. A one-standard-deviation increase in curvature is associated with higher cumulative growth over three-year horizons, and curvature systematically outperforms standard network metrics in explaining cross-country differences in resilience.
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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.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Vallarino, Diego (2026) Stochastic Network Survival Dynamics: A Nonlinear Evolution Problem on Economic Graphs self | 1.000 | 6 | 4 | 100% |
| 2 | Bak, Per and Tang, Chao and Wiesenfeld, Kurt (1987) Self-Organized Criticality: An Explanation of the 1/f Noise | 1.000 | 5 | 4 | 100% |
| 3 | Clauset, Aaron and Shalizi, Cosma Rohilla and Newman, Mark E. J (2009) Power-Law Distributions in Empirical Data | 1.000 | 5 | 3 | 100% |
| 4 | Acemoglu, Daron and Carvalho, Vasco M. and Ozdaglar, Asuman and Tahb… (2012) The Network Origins of Aggregate Fluctuations | 0.928 | 4 | 3 | 100% |
| 5 | Dosi, Giovanni (1988) Sources, Procedures, and Microeconomic Effects of Innovation | 0.928 | 4 | 3 | 100% |
| 6 | Baqaee, David Rezza and Farhi, Emmanuel (2019) The Macroeconomic Impact of Microeconomic Shocks: Beyond Hulten's Theorem | 0.874 | 6 | 4 | 67% |
| 7 | Dosi, Giovanni and Fagiolo, Giorgio and Roventini, Andrea (2010) Schumpeter Meeting Keynes: A Policy-Friendly Model of Endogenous Growth and Business Cycles | 0.843 | 3 | 3 | 100% |
| 8 | Driscoll, John C. and Kraay, Aart C (1998) Consistent Covariance Matrix Estimation with Spatially Dependent Panel Data | 0.811 | 4 | 2 | 100% |
| 9 | Arthur, W. Brian (1999) Complexity and the Economy | 0.737 | 3 | 2 | 100% |
| 10 | Carvalho, Vasco M. and Tahbaz-Salehi, Ali (2019) Production Networks: A Primer | 0.737 | 3 | 2 | 100% |
Showing the top 10 of 66 scored citations.
arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.
| Citing paper | Intensity | Mentions | Sections | |
|---|---|---|---|---|
| 1 | Sovereign Stress Avalanches and Network Amplification in Latin America | 0.405 | 1 | 1 |