Global supply chain interdependence and shock amplification – evidence from Covid lockdowns

Sally Chen, Eric Tsang and Leanne (Si Ying) Zhang

No 1123, BIS Working Papers from Bank for International Settlements

Abstract: Supply disruptions from the Covid-19 pandemic raise questions about the benefits and costs of global value chain (GVC) participation and the possibility that supply chain networks may have shifted during this period. Using firm-level data on supply chain linkages, we document the evolution of GVCs during the pandemic by comparing GVC network diagrams and firms' shipment data over the course of the pandemic. Furthermore, we study how such linkages affected equity investors' reaction to pandemicrelated disruptions. Our findings suggest that GVCs contracted following the pandemic outbreak and were slow to recover in some sectors. We also find that firms with GVC links to countries undergoing Covid-related lockdowns suffered larger stock price losses than those without such links. In addition, sectoral responses to lockdown announcements varied, underscoring the need to consider sectoral differences in the study of GVC shifts.

Keywords: supply chain; supply networks; amplification; equity prices (search for similar items in EconPapers)
JEL-codes: F10 G12 G14 O24 (search for similar items in EconPapers)
Date: 2023-09
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

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Journal Article: Global supply chain interdependence and shock amplification - evidence from Covid lockdowns (2023)
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