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Propagation of Shocks by Natural Disasters through Global Supply Chains

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  • KASHIWAGI Yuzuka
  • TODO Yasuyuki
  • Petr MATOUS

Abstract

This study investigates the indirect effects of shocks by Hurricane Sandy that hit the United States in 2012. Using firm-level data on global supply chains, we examine how sales growth of firms inside and outside the United States changed when their suppliers or clients were damaged by the hurricane. Our results show that the effect of damaged firms on their transaction partners in the United States is negative and statistically significant, while the effect on their partners outside the United States is insignificant. Alternative specifications suggest that internationalized firms' ability to substitute for damaged partners most likely explains the absence of international propagation.

Suggested Citation

  • KASHIWAGI Yuzuka & TODO Yasuyuki & Petr MATOUS, 2018. "Propagation of Shocks by Natural Disasters through Global Supply Chains," Discussion papers 18041, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:18041
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    References listed on IDEAS

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    Cited by:

    1. HOSONO Kaoru & MIYAKAWA Daisuke & ONO Arito & UCHIDA Hirofumi & UESUGI Iichiro, 2019. "Damage to the Transportation Infrastructure and Disruption of Inter-firm Transactional Relationships," Discussion papers 19043, Research Institute of Economy, Trade and Industry (RIETI).
    2. Takano, Keisuke, 2019. "Does visible shock update firms' unrelated trade diversity in anticipation of future shock? Evidence from the Great East Japan Earthquake and expected Nankai Trough Earthquake," TDB-CAREE Discussion Paper Series E-2019-01, Teikoku Databank Center for Advanced Empirical Research on Enterprise and Economy, Graduate School of Economics, Hitotsubashi University.
    3. Längle, Katharina & Xu, Ankai & Tian, Ruijie, 2021. "Assessing the supply chain effect of natural disasters: Evidence from Chinese manufacturers," WTO Staff Working Papers ERSD-2021-13, World Trade Organization (WTO), Economic Research and Statistics Division.
    4. Jiangtao FU & Petr MATOUS & TODO Yasuyuki, 2018. "Trade Credit in Global Supply Chains," Discussion papers 18049, Research Institute of Economy, Trade and Industry (RIETI).

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