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Propagation of Shocks by Natural Disasters through Global Supply Chains

Yuzuka Kashiwagi, Yasuyuki Todo and Petr Matous

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

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.

New Economics Papers: this item is included in nep-int
Date: 2018-06
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Handle: RePEc:eti:dpaper:18041