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

Alessandro Borin (), Gianmarco Cariola (), Elena Gentili (), Andrea Linarello, Michele Mancini, Tullia Padellini (), Ludovic Panon and Enrico Sette
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Alessandro Borin: Bank of Italy
Gianmarco Cariola: Bank of Italy
Elena Gentili: Bank of Italy
Tullia Padellini: Bank of Italy

No 819, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

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.

Keywords: Geoeconomic fragmentation; international trade; imported inputs; global value chain (search for similar items in EconPapers)
JEL-codes: F10 F14 (search for similar items in EconPapers)
Date: 2023-11
New Economics Papers: this item is included in nep-eec, nep-int and nep-rmg
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Citations: View citations in EconPapers (1)

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