Supply Shocks in Supply Chains: Evidence from the Early Lockdown in China

R. Lafrogne-Joussier, Julien Martin and Isabelle Mejean
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R. Lafrogne-Joussier: Insee and CREST-Ecole Polytechnique

Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques

Abstract: How do firms in global value chains react to input shortages? We examine micro-level adjustments to supply chain shocks, building on the COVID-19 pandemic as a case study. French firms sourcing inputs from China just before the early lockdown in the country experienced a relative drop in imports that increases from February to April 2020. This shock on input purchases transmits to the rest of the supply chain through exposed firms' domestic and export sales. Between February and June, firms exposed to the Chinese early lockdown experienced a 5.5% drop in domestic sales and a 5% drop in exports, in relative terms with respect to comparable non-exposed firms. The drop in foreign sales is entirely attributable to a lower volume of exports driven by a temporary withdrawal from occasional markets. We then dig into the heterogeneity of the transmission across treated firms. Whereas the ex-ante geographic diversication of inputs does not seem to mitigate the impact of the shock, firms with relatively high inventories have been able to absorb the supply shock better.

Keywords: Covid-19 pandemic; Supply chain disruptions; Transmission of shocks; Global Value Chains (search for similar items in EconPapers)
JEL-codes: F1 F6 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-cna and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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https://www.bnsp.insee.fr/ark:/12148/bc6p08d96mk?rk=429186;4 Document de travail de la DESE numero 2023/08 (application/pdf)

Related works:
Journal Article: Supply Shocks in Supply Chains: Evidence from the Early Lockdown in China (2023)
Working Paper: Supply Shocks in Supply Chains: Evidence from the Early Lockdown in China (2022)
Working Paper: Supply Shocks in Supply Chains: Evidence from the Early Lockdown in China (2022)
Working Paper: Supply shocks in supply chains: Evidence from the early lockdown in China (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:nse:doctra:2023-08

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