The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory

Xiwen Bai (), Jesus Fernandez-Villaverde, Yiliang Li () and Francesco Zanetti
Additional contact information
Xiwen Bai: Tsinghua University
Yiliang Li: University of International Business and Economics

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: We study the causal effects and policy implications of global supply chain disruptions.We construct a new index of supply chain disruptions from the mandatory automatic identification system data of container ships, developing a novel spatial clustering algorithm that determines real-time congestion from the position, speed, and heading of container ships in major ports around the globe. We develop a model with search frictions between producers and retailers that links spare productive capacity with congestion in the goods market and the responses of output and prices to supply chain shocks. The co-movements of output, prices, and spare capacity yield unique identifying restrictions for supply chain disturbances that allow us to study the causal effects of such disruptions. We document how supply chain shocks drove inflation during 2021 but that, in 2022, traditional demand and supply shocks also played an important role in explaining inflation. Finally, we show how monetary policy is more effective in taming inflation after a global supply chain shock than in regular circumstances.

Keywords: supply chain disruptions; search-and-matching in the goods market; SVAR; state-dependence of monetary policy (search for similar items in EconPapers)
JEL-codes: E32 E58 J64 (search for similar items in EconPapers)
Pages: 173 pages
Date: 2024
New Economics Papers: this item is included in nep-dge and nep-eur
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Citations: View citations in EconPapers (18)

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Related works:
Working Paper: The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory (2024)
Working Paper: The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory (2024)
Working Paper: The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory (2024)
Working Paper: The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory (2024)
Working Paper: The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory (2024)
Working Paper: The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory (2024)
Working Paper: The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory (2024)
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