Wednesday, March 4, 2026 10:00 - 11:30

This event is both online and in person.

SAL 1.04, 1st Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH

Online participants are welcome:
Please sign up to our mailinglist (seminar_macroiep) to receive event updates and a link to the seminar online.

About this event

We study how equilibrium patterns of production, trade, and input sourcing in complex supply chains are shaped by aggregate risk. We develop a quantitative model of sequential production under risk, with inputs for each production stage sourced from multiple origins. Input production is subject to aggregate shocks that can vary by origin-destination and production stage. We analytically characterize country-stage input sourcing as a function of the variances of global shocks and production elasticities within and across all stages, and derive analytical results contrasting the welfare impact of increases in risk in upstream stages relative to downstream stages. We quantify the model using 3 stages of production and 50 countries. Counterfactuals show that revealed comparative advantage flattens in a risky world, as countries diversify away from the relatively most productive regions to mitigate risk. On average, welfare volatility increases with increasing supply chain complexity, but riskier countries benefit from the increased opportunities to diversify as the number of production stages increase. We also quantify the welfare impacts of an increase in Chinese-origin risk, and an increase in U.S. trade costs in a world with risky global supply chains.

Participants are expected to adhere to the CEP Events Code of Conduct.

Directions

This event will take place in SAL 1.04, 1st Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH.

Online participants are welcome:
Please sign up to our mailinglist (seminar_macroiep) to receive event updates and a link to the seminar online.

The building is labelled SAL on the LSE campus map. You can also find us on Google Maps. For further information, go to contact us.

Trade and Urban Seminars are part of the CEP's Trade programme and Urban programme.