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UID:212ecda55f78b61026541a61ddcbdc67
CATEGORIES:Seminars
CREATED:20190405T112747
SUMMARY:Lunch Seminar: Matthew L. Elliott - University of Cambridge
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:Supply Network Formation and Fragility joint with Benjamin Golub and Matthe
 w Leduc \nAbstract:\nModern production is complex: For instance, building a
 n airplane requires combining many components. In turn, many of the compone
 nts - e.g., navigation systems, engines, etc. - are complex, themselves mad
 e up of many components, and so on. Because, in each step, several inputs a
 re essential, there are strong complementarities, both within a single firm
 's production and in the economy more broadly. Indeed, a disruption in sour
 cing can inhibit the production of many other goods. Thus complementarities
  have the capacity to amplify shocks and misallocations. The induced sensit
 ivity of production to the environment created by complementarities has hel
 ped explain a range of empirical phenomena including very large cross-count
 ry differences in production technology and aggregate productivity; rapid o
 utput increases during periods of industrialization; and the structure of p
 roduction networks and international trade flows. Of course, the probabilit
 y of failures, and the consequences of a given failure for production, are 
 endogenous firms invest effort in multisourcing and in making their supply 
 relationships work. We study how individual multi-sourcing decisions transl
 ate into global reliability and find some stark phenomena that are new and 
 that occur because of the complex nature of production (multiple essential 
 inputs). While endogenous multi-sourcing makes an individual firm relativel
 y robust to the failure of some of its relationships, and the economy as a 
 whole robust to firm-specific shocks, the system also exhibits very stark g
 lobal fragility with respect to certain types of more aggregate shocks. Eve
 n when these shocks are small, aggregate output can fall discontinuously.\n
 \n\n \n
DTSTAMP:20260403T183748Z
DTSTART:20190412T130000Z
DTEND:20190412T140000Z
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