Journal article
Financial constraints and propagation of shocks in production networks
- Abstract:
- We examine the propagation of a small unexpected supply shock through a production network and the role financial constraints play in its transmission. Using data on almost all Turkish supplier-customer links, we exploit the heterogeneous impact of an unexpected import-tax increase for identification. We find that this relatively minor shock had a nontrivial economic impact on exposed firms and propagated downstream through affected suppliers. Importantly, we show that low-liquidity firms amplified its transmission.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
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- Files:
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(Preview, Version of record, pdf, 491.4KB, Terms of use)
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- Publisher copy:
- 10.1162/rest_a_01162
Authors
- Publisher:
- Massachusetts Institute of Technology Press
- Journal:
- Review of Economics and Statistics More from this journal
- Volume:
- 106
- Issue:
- 2
- Pages:
- 437-454
- Publication date:
- 2024-03-19
- Acceptance date:
- 2021-12-09
- DOI:
- EISSN:
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1530-9142
- ISSN:
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0034-6535
- Language:
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English
- Pubs id:
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1607241
- Local pid:
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pubs:1607241
- Deposit date:
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2024-12-12
- ARK identifier:
Terms of use
- Copyright date:
- 2022
- Rights statement:
- © 2022 The President and Fellows of Harvard College and the Massachusetts Institute of Technology
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