Reactions of Economy Toward Various Disasters Estimated by Firm-Level Simulation

Social and economic networks can be a channel of negative shocks and thus deteriorate resilience and sustainability of our society. This study focuses on actual supply chains, or supplier–customer networks of firms and examines how production losses caused by disasters. We apply an agent-based model to the actual supply chains of nearly one million firms in Japan and test virtual and actual disasters. As virtual disasters, we test different intensity, substitutability, regions, and sectors of damages. Then, as actual disasters, we estimate the direct and indirect effects of the 2011 Great East Japan earthquake and employ the same model to predict the effect of the Nankai earthquake, a mega earthquake predicted to hit major industrial cities in Japan in the near future.