Supply chain disruptions: Evidence from the great east japan earthquake

Vasco M. Carvalho, Makoto Nirei, Yukiko U. Saito, Alireza Tahbaz-Salehi

Research output: Contribution to journalReview articlepeer-review

14 Citations (Scopus)

Abstract

Exploiting the exogenous and regional nature of the Great East Japan Earthquake of 2011, this article 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 along 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.

Original languageEnglish
Pages (from-to)1255-1321
Number of pages67
JournalQuarterly Journal of Economics
Volume136
Issue number2
DOIs
Publication statusPublished - 2021 May 1
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

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