Propagation of Shocks by Natural Disasters through Global Supply Chains

         
Author Name KASHIWAGI Yuzuka (Waseda University) / TODO Yasuyuki (Faculty Fellow, RIETI) / Petr MATOUS (The University of Sydney)
Creation Date/NO. June 2018 18-E-041
Research Project Research on Global Inter-firm Networks and Related Policies
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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.