Supply Chain Disruptions: Evidence from the Great East Japan Earthquake

55 Pages Posted: 19 Dec 2016 Last revised: 29 Jun 2020

See all articles by Vasco M. Carvalho

Vasco M. Carvalho

Universitat Pompeu Fabra/CREI; Centre for Economic Policy Research (CEPR); University of Cambridge

Yukiko Saito

早稲田大学; Waseda University - School of Political Science and Economics; Research Institute of Economy, Trade and Industry (RIETI)

Alireza Tahbaz-Salehi

Northwestern University - Kellogg School of Management; Centre for Economic Policy Research (CEPR)

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Date Written: December 2016

Abstract

Exploiting the exogenous and regional nature of the Great East Japan Earthquake of 2011, this paper provides a quantification of the role of input-output linkages as a mechanism for the propagation and amplification of shocks. We document that the disruption caused by the disaster propagated upstream and downstream supply chains, affecting the direct and indirect suppliers and customers of disaster-stricken firms. Using a general equilibrium model of production networks, we then obtain an estimate for the overall macroeconomic impact of the disaster by taking these propagation effects into account. We find that the earthquake and its aftermaths resulted in a 0.47 percentage point decline in Japan's real GDP growth in the year following the disaster.

Keywords: Aggregate fluctuations, Input-Output, Natural Disasters, production networks, Supply Chains

Suggested Citation

Carvalho, Vasco M. and Saito, Yukiko and Tahbaz-Salehi, Alireza, Supply Chain Disruptions: Evidence from the Great East Japan Earthquake (December 2016). CEPR Discussion Paper No. DP11711, Available at SSRN: https://ssrn.com/abstract=2887351

Vasco M. Carvalho (Contact Author)

Universitat Pompeu Fabra/CREI ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

HOME PAGE: http://www.crei.cat/people/carvalho/welcome.html

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

Yukiko Saito

早稲田大学 ( email )

1-6-1 Nishiwaseda
Shinjuku, Tokyo 169-8050
Japan
0352861213 (Phone)

Waseda University - School of Political Science and Economics ( email )

1-6-1 Nishi-Waseda
Shinjuku-ku, Tokyo 169-8050, Tokyo 169-8050
Japan

Research Institute of Economy, Trade and Industry (RIETI) ( email )

1-3-1 Kasumigaseki
Chiyoda-ku
Tokyo 100-8901
Japan

Alireza Tahbaz-Salehi

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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