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

Raphael Lafrogne-Joussier, Julien Martin and Isabelle Mejean
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Raphael Lafrogne-Joussier: CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique

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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 firm's 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 diversification 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)
Date: 2022-03-22
New Economics Papers: this item is included in nep-cna and nep-int
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03880125
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Published in IMF Economic Review, In press, ⟨10.1057/s41308-022-00166-8⟩

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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 (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 (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03880125

DOI: 10.1057/s41308-022-00166-8

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