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Firm-Network Characteristics and Economic Robustness to Natural Disasters

  • Henriet, F.
  • Hallegatte, S.
  • Tabourier, L.

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 sectorscale 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.

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Paper provided by Banque de France in its series Working papers with number 355.

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Length: 49 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:bfr:banfra:355
Contact details of provider: Postal: Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS
Web page: http://www.banque-france.fr/

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  1. Gatti, Domenico Delli & Guilmi, Corrado Di & Gaffeo, Edoardo & Giulioni, Gianfranco & Gallegati, Mauro & Palestrini, Antonio, 2005. "A new approach to business fluctuations: heterogeneous interacting agents, scaling laws and financial fragility," Journal of Economic Behavior & Organization, Elsevier, vol. 56(4), pages 489-512, April.
  2. Nier, Erlend & Yang, Jing & Yorulmazer, Tanju & Alentorn, Amadeo, 2008. "Network models and financial stability," Bank of England working papers 346, Bank of England.
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  8. Hallegatte, Stephane & Hourcade, Jean-Charles & Dumas, Patrice, 2007. "Why economic dynamics matter in assessing climate change damages: Illustration on extreme events," Ecological Economics, Elsevier, vol. 62(2), pages 330-340, April.
  9. Sungbin Cho & Peter Gordon & James E. Moore II & Harry W. Richardson & Masanobu Shinozuka & Stephanie Chang, 2001. "Integrating Transportation Network and Regional Economic Models to Estimate the Costs of a Large Urban Earthquake," Journal of Regional Science, Wiley Blackwell, vol. 41(1), pages 39-65.
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  11. Adam Rose & Shu-Yi Liao, 2005. "Modeling Regional Economic Resilience to Disasters: A Computable General Equilibrium Analysis of Water Service Disruptions," Journal of Regional Science, Wiley Blackwell, vol. 45(1), pages 75-112.
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  14. Christopher W. Anderson & Joost R. Santos & Yacov Y. Haimes, 2007. "A Risk-based Input-Output Methodology for Measuring the Effects of the August 2003 Northeast Blackout," Economic Systems Research, Taylor & Francis Journals, vol. 19(2), pages 183-204.
  15. Martínez-Jaramillo, Serafín & Pérez, Omar Pérez & Embriz, Fernando Avila & Dey, Fabrizio López Gallo, 2010. "Systemic risk, financial contagion and financial fragility," Journal of Economic Dynamics and Control, Elsevier, vol. 34(11), pages 2358-2374, November.
  16. B. Coluzzi & M. Ghil & S. Hallegatte & G. Weisbuch, 2010. "Boolean delay equations on networks: An application to economic damage propagation," Papers 1003.0793, arXiv.org.
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