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Faculty News April 28, 2025

Princeton Economics Professor & Student Help Develop New Tool for Monitoring Supply Chain Disruptions

A collaborative team of economists from leading universities, including Princeton and Yale, has unveiled the Blue Center Index of Critical Supply Chain Disruptions. Officially launched on April 23, 2025, at Yale University, this innovative tool equips firms and governments to detect disruptions in critical goods’ supply chains with unprecedented precision and granularity. “We can provide insights at the firm level, and we can do it with only about a two-week latency,” said Aleh Tsyvinski, the Arthur M. Okun Professor of Economic and Global Affairs at Yale University.
The research team gathered hundreds of millions of data records from multiple public and private sources and applied proprietary machine learning algorithms. These algorithms identify which products should be categorized as critical and quantify disruption rates, resulting in a near real-time view of whether critical trade is proceeding normally or experiencing disruptions.
Ernest Liu, Associate Professor of Economics at Princeton, and Aleh Tsyvinski began collaborating several years ago on supply chain disruption research, including a study published in The Review of Economic Studies. Together with Vladimir Smirnyagin of the University of Virginia and Yukun Liu from the University of Rochester, they developed methodologies that enable users to analyze disruptions across regions, product origins, and categories. The team also specifically identifies critical goods, leveraging extensive computational methods drawn from economics, data science, and advanced algorithms to handle the substantial data volume involved.
Another Princetonian on the team is Astor Lu, a junior economics major, who joined the project in October 2024. Lu conducted a thorough review of over 2,500 products listed by the Department of Commerce as critical supply chains, creating a rigorous grading framework based on security and economic importance. This process narrowed the list to 152 critical goods, further validated by the team’s proprietary machine learning techniques.
“Our collaboration has been exceptionally smooth,” said Lu. “There was a constant back-and-forth of ideas and feedback between the team members at all four universities. All of us bring slightly different backgrounds and areas of expertise that come together nicely to drive a cohesive and rigorous research agenda.”
To accurately detect disruptions, the team established a detailed baseline of normal trade patterns using over 200 million customs records obtained via Freedom of Information Act requests and over 350 million census records dating back to the 1970s. The model also integrates financial data, such as firm balance sheets, stock market returns, and analyst forecasts, to provide comprehensive context.
Ernest Liu noted, “By identifying disruptions quickly and precisely, this tool empowers decision-makers in both the public and private sectors to proactively mitigate supply chain risks.”
The Blue Center Index offers significant implications for policy-making, delivering near real-time insights into the effectiveness of international economic policies like tariffs, export controls, and sanctions. Lu emphasized, “In an environment where tariffs, export controls, and sanctions are being applied with unprecedented rapidity, this tool offers a critical lens into what’s actually happening on the ground, ensuring that policy is informed rather than improvised.”
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