Matt Elliott - University of Cambridge will present "Supply Chain Disruptions, the Structure of Production Networks, and the Impact of Globalization" joint work with Matt Jackson.

Abstract:

We develop a parsimonious multi-sector model of international production and use it to study how a disruption in the production of some 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 the final goods whose supply chains on which disrupted goods lie, while by contrast the long-run disruption depends on the cost of the disrupted goods. We use the model to show that increased complexity of supply chains leads to increased fragility. We also show that decreased transportation costs lead to increased specialization in production and a potential for greater fragility.