Firm-Network Characteristics and Economic Robustness to Natural Disasters
49 Pages Posted: 14 Dec 2011
Date Written: December 1, 2011
Abstract
This article proposes a theoretical framework to investigate economic robustness to exogenous shocks such as natural disasters. It is based on a dynamic model that represents a regional economy as a network of production units through the disaggregation of sector-scale Input-Output tables. Results suggest that disaster-related output losses depend on direct losses heterogeneity and on the economic network structure. Two aggregate indexes, concentration and clustering, appear as important drivers of economic robustness, offering opportunities for robustness-enhancing strategies. Modern industrial organization seems to reduce short-term robustness in a trade-off against higher efficiency in normal times.
Keywords: Natural disasters, Economic impacts, Economic Network
JEL Classification: C63, D85, L14, Q54
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