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Inputs in geopolitical distress: a risk assessment based on micro data

Author

Listed:
  • Alessandro Borin

    (Bank of Italy)

  • Gianmarco Cariola

    (Bank of Italy)

  • Elena Gentili

    (Bank of Italy)

  • Andrea Linarello

    (Bank of Italy)

  • Michele Mancini

    (Bank of Italy)

  • Tullia Padellini

    (Bank of Italy)

  • Ludovic Panon

    (Bank of Italy)

  • Enrico Sette

    (Bank of Italy)

Abstract

Using customs and balance sheet data for Italy, we identify foreign-dependent products (FDPs) and quantify the effect of any disruptions to those products. Our framework allows us to assess how geoeconomic fragmentation affects value added at different levels of aggregation. Our baseline calibration suggests that a reduction in the imports of FDPs from high geopolitical risk countries would result in a 2 per cent drop in GDP, with sizable heterogeneity across firms, regions, and sectors. Our findings highlight that the short-term costs of supply disruptions for critical inputs can be substantial, especially when firms cannot easily substitute away from those products.

Suggested Citation

  • Alessandro Borin & Gianmarco Cariola & Elena Gentili & Andrea Linarello & Michele Mancini & Tullia Padellini & Ludovic Panon & Enrico Sette, 2023. "Inputs in geopolitical distress: a risk assessment based on micro data," Questioni di Economia e Finanza (Occasional Papers) 819, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_819_23
    as

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    References listed on IDEAS

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    Cited by:

    1. Alessandro D'Orazio & Fabrizio Ferriani & Andrea Gazzani, 2024. "Geoeconomic fragmentation and firms' financial performance," Questioni di Economia e Finanza (Occasional Papers) 844, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

    Geoeconomic fragmentation; international trade; imported inputs; global value chain;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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