The Bullwhip: Time-to-Build and Sectoral Fluctuations

Yan Leng, Ernest Liu, Yifei Ren and Aleh Tsyvinski
Additional contact information
Yan Leng: University of Texas at Austin
Ernest Liu: Princeton University
Yifei Ren: Princeton University
Aleh Tsyvinski: Yale University

No 2436, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We develop a theory of sectoral fluctuations driven by the propagation of demand shocks along supply chains with heterogeneous time to-build production. We solve the model in closed form. Downstream producers respond directly to current demand. Upstream producers, due to time-to-build delays, respond to anticipated future demand. Consequently, hump-shaped demand shocks to downstream goods propagate and amplify along the supply chain, generating pronounced volatility in upstream sectors and creating the bullwhip effect. Empirically and quantitatively, we show that the bullwhip is significant across downstream sectors that are important for final consumption.

Pages: 76 pages
Date: 2025-03-29
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cowles.yale.edu/sites/default/files/2025-04/d2436.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cwl:cwldpp:2436

Ordering information: This working paper can be ordered from
Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
The price is None.

Access Statistics for this paper

More papers in Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University Yale University, Box 208281, New Haven, CT 06520-8281 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Brittany Ladd ().