Demir, BanuJavorcik, BeataMichalski, Tomasz K.Ors, Evren2025-02-172025-02-172024-03-190034-6535https://hdl.handle.net/11693/116331We examine the propagation of a small unexpected supply shock through a production network and the role financial constraints play in its transmission. Using data on almost all Turkish supplier-customer links, we exploit the heterogeneous impact of an unexpected import-tax increase for identification. We find that this relatively minor shock had a nontrivial economic impact on exposed firms and propagated downstream through affected suppliers. Importantly, we show that low-liquidity firms amplified its transmission.EnglishCC BY 4.0 (Attribution 4.0 International)https://creativecommons.org/licenses/by/4.0/Production networksShock transmissionFinancing constraintsLiquidityArticle10.1162/rest_a_011621530-9142