How would an energy embargo affect Germany’s economy?
Professor Vasco Carvalho's research on Production Networks and Professor Matthew Elliott's research into Supply Network Formation and Fragility has been quoted in The Economist.
The article looks at Russia’s decision to halt the supply of gas to Bulgaria and Poland, and how this has fuelled debate in Germany, which as a country is heavily reliant on hydrocarbons.
Professor Carvalho's research is detailed in the article, examining the impact on the affected areas from the ripple effects which occur along supply chains. It finds that the latter accounted for more than half the hit to Japanese growth.
The article then details research which Professor Elliott's paper shows, that firms often look at a business case to invest in the robustness of their supply chains. However, these companies sometimes fail ensure the resilience of the wider network, because they do not stand to reap the rewards from such investment.
Related papers:
From Micro to Macro via Production Networks, Carvalho, V. (2014) Journal of Economic Perspectives, 28, no. 4.
Production Networks: A Primer, Carvalho, V., and Tahbaz-Salehi, A. (2019) Annual Review of Economics 11: 635–63.
Supply Network Formation and Fragility, Elliott, M., Golub, B. and Leduc, M. V. (2022) American Economic Review, accepted.
Read full article on The Economist site (with subscription)
