Global Versus Domestic Supply Chain Disruptions: Implications for Inflation and Economic Confidence

Hakan Yilmazkuday

International Finance, 2026, vol. 29, issue 1, 135-148

Abstract: This article investigates the effects of global and domestic supply chain disruptions on inflation and economic confidence in seven major economies. Using a structural vector autoregression model on monthly data from 2010 to 2024, the analysis controls for global oil prices, shadow policy rates and nominal effective exchange rates. The results demonstrate that supply chain disruptions significantly increase inflation in developed economies, with global shocks having a dominant influence over domestic ones. Quantitatively, supply chain disruptions explain about 55% and 51% of inflation volatility in the United States and Spain, respectively. Supply chain disruptions also significantly reduce consumer confidence globally and depress business confidence in the United States, the United Kingdom and Spain. These findings hold robust across alternative identification strategies and model specifications. The analysis highlights distinct cross‐country heterogeneity, notably sensitivity of the United States to domestic bottlenecks and exposure of France to oil price shocks, suggesting that policy responses must be structurally tailored.

Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:bla:intfin:v:29:y:2026:i:1:p:135-148

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