Wednesday, May 15, 2024
Hoover Institution | Stanford University
Matthew O. Jackson, William D. Eberle Professor of Economics at Stanford University, and external faculty member at the Santa Fe Institute, discussed “Supply Chain Disruptions, the Structure of Production Networks, and the Impact of Globalization,” a paper with Matthew Elliott (University of Cambridge).
PARTICIPANTS
Matthew Jackson, John Taylor, Michael Boskin, Doug Branch, Pedro Carvalho, John Cochrane, Steven Davis, Randi Dewitty, Matthew Elliott, David Fedor, Andy Filardo, Jared Franz, Paul Gregory, Robert Hall, Robert Hodrick, Ken Judd, Robert King, Evan Koenig, Roman Kraussl, Robert Oster, Radek Paluszynski, Alvin Rabushka, Valerie Ramey, Isaac Sorkin, Richard Sousa, Tom Stephenson, Jack Tatom, Yevgeniy Teryoshin
ISSUES DISCUSSED
Matthew O. Jackson, William D. Eberle Professor of Economics at Stanford University, and external faculty member at the Santa Fe Institute, discussed “Supply Chain Disruptions, the Structure of Production Networks, and the Impact of Globalization,” a paper with Matthew Elliott (University of Cambridge).
John Taylor, the Mary and Robert Raymond Professor of Economics at Stanford University and the George P. Shultz Senior Fellow in Economics at the Hoover Institution, was the moderator.
PAPER SUMMARY
We introduce a parsimonious multi-sector model of international production and use it to study how a disruption in the production of intermediate goods propagates through to final goods, and how that impact depends on the goods’ positions in, and overall structure of, the production network. We show that the short-run disruption can be dramatically larger than the long-run disruption. The short-run disruption depends on the value of all of the final goods whose supply chains involve a disrupted good, while by contrast the long-run disruption depends only on the cost of the disrupted goods. We use the model to show how increased complexity of supply chains leads to increased fragility in terms of the probability and expected short-run size of a disruption. We also show how decreased transportation costs can lead to increased specialization in production, with lower chances for disruption but larger impacts conditional upon disruption.
To read the paper, click the following link
papers.ssrn.com/sol3/papers.c...
To read the slides, click the following link
www.hoover.org/sites/default/...