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Quarterly Journal of Economics Vol. 136 No. 2 2021

Supply Chain Disruptions: Evidence from the Great East Japan Earthquake*

Vasco M. Carvalho1; Makoto Nirei2; Yukiko Saito3; Alireza Tahbaz-Salehi4

1 University of Cambridge, Alan Turing Institute, and Centre for Economic Policy Research · 2 University of Tokyo · 3 Waseda University and Research Institute of Economy, Trade, and Industry · 4 Northwestern University and Centre for Economic Policy Research

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.

DOI
10.1093/qje/qjaa044
Volume
136
Issue
2
Pages
1255-1321
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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