Amsterdam TI Finance Research Seminars

Speaker(s)
Jean-Noël Barrot (Massachusetts Institute of Technology, United States)
Date
Wednesday, 22 October 2014
Location
Amsterdam

This paper examines whether firm-level idiosyncratic shocks propagate in production networks. We identify idiosyncratic shocks with the occurrence of natural disasters. We find that affected suppliers impose substantial output losses on their customers, especially when they produce specific inputs. These output losses translate into significant value losses, and they spill over to other suppliers. Our point estimates are economically large, suggesting that input specificity is an important determinant of the propagation of idiosyncratic shocks in the economy. Joint with Julien Sauvagnat.