Resilience and robustness of Global Supply Chains under risk and ambiguity

Jason Allen

Journal of Economics and Econometrics, 2022, vol. 65, issue 3, 90-104

Abstract: The Resilience and robustness of Global Supply Chains (GSC) is heavily impacted by aggregate shocks, such as Covid-19 implying ruptures in supply, supply, demand or transportation. We propose a model in which GSCs are composed of firms which sell to each other and final customers. These firms face risks and ambiguities, as sourcing inputs from abroad exposes domestic firms to foreign shocks: the costs and effects of delinking; the propagation of micro into macro shocks; GSCs amplify the trade impact of macro shocks. The fully rational risk and ambiguity averse agents internalise the survival probability. Our model is an extension of the Caliendo-Parro (2015) roundabout framework.

Keywords: Risk; ambiguity; Global Supply Chain; uncertainty; aggregate shocks; Covid-19 (search for similar items in EconPapers)
JEL-codes: E7 F02 F12 F13 L15 (search for similar items in EconPapers)
Date: 2022
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