Propagation of economic shocks through global supply chains—Evidence from Hurricane Sandy

Abstract

This study examines whether and how economic shocks from natural disasters propagate through supply chains to regions not directly hit by disasters. Although such propagation has been studied, less attention has been paid to heterogeneity across network characteristics of firms. Focusing on the impacts of a hurricane and using firm-level data for major firms in the world that include supply-chain ties among them, we find evidence of the intra-national propagation of the shock in the United States. Our results further suggest that both input specificity and network density are important determinants of the level of propagation.