The Regional Spillover Effects of the Tohoku Earthquake

In this paper, we trace out how a decline in industrial production in one region can be propagated throughout Japan. We model Kanto as the dominant region, which includes the Tokyo area, and then use the model to analyze how a shock to industrial production in Tohoku–owing to the earthquake can be propagated throughout Japan. In our econometric model, regions and industries within regions are linked by an input-output structure and this input-output structure disciplines how the shocks are spatially propagated