A team of economists led by Aleh Tsyvinski, the Arthur M. Okun Professor of Economic and Global Affairs at the Jackson School, has launched a tool for monitoring supply chain disruptions, enabling firms and governments to detect abnormalities in the flows of critical products and materials.
The project received support from Jackson’s Blue Center for Global Strategic Assessment. Tsyvinski’s research team includes professors from Princeton, the University of Virginia, and the University of Rochester.
The research team has gathered hundreds of millions of data records from multiple public and private sources, then applied proprietary machine learning algorithms to that data — both to determine which products should be categorized as critical, and to quantify the rate of disruption in the flows of those products. The result is the Blue Center Index of Critical Supply Chain Disruptions, a near real-time picture of whether critical trade is occurring normally or experiencing disturbances.
Many trade economists have examined supply chains and studied supply chain disruption, but what makes this new index unique is its size and speed.
“Without advanced computational tools drawn from economics, data science and computations, it would be impossible to grapple with the amount of data we’re ingesting in order to produce these insights,” Tsyvinski explained, “let alone do so quickly enough that firms can actually respond to what they’re seeing.”
In order for the model to be able to detect “disruptions,” it needs to understand what “normal” trade looks like. It does this by combining over 200 million customs records obtained through the Freedom of Information Act, with over 350 million census data records going back to the 1970s. Tsyvinski’s team also combines that trade data with financial data drawn from firm balance sheets, stock market returns, and analyst estimates.
The team has previously produced a working paper investigating the effect supply disruptions have on firms’ investment decisions.
“Our data has an unprecedented level of granularity,” Tsyvinski said. “We can provide insights at the firm level, and we can do it with only about a two-week latency. So if you want to look at the flow of aircraft parts to Lockheed Martin, for example, or you want to compare that to Northrop Grumman, we can do that.”
“The Blue Center Index of Critical Supply Chain Disruptions has immediate policy relevance,” said Phil Kaplan, the executive director of the Blue Center, who previously served as a senior advisor for sanctions policy at the U.S. Treasury Department. “If policymakers are going to apply tariffs, or cut trade deals, it’s important that they be able to monitor the implementation and effects of those policies — and this index is an incredible tool that can concretely contribute to that.”
The index was launched at an event on the Yale campus on April 23, attended by the Board of Advisors of the Jackson School and other members of the Yale community, to celebrate the first year of the Blue Center. Jake Sullivan, the assistant to the president for national security affairs during the Biden Administration, also spoke at the celebration.
In addition to support from the Blue Center, the research of Tsyvinski and his colleagues is supported by the Cowles Foundation for Research in Economics and the Tobin Center for Economic Policy.