The Aggregate Effects of Global and Local Supply Chain Disruptions: 2020–2022

George Alessandria, Shafaat Khan, Armen Khederlarian, Carter Mix and Kim Ruhl

No 10303, Policy Research Working Paper Series from The World Bank

Abstract: This paper studies the aggregate effects of supply chain disruptions in the post-pandemic period in a heterogeneous-firm, general equilibrium model with input-output linkages and a rich set of supply chain frictions: uncertain shipping delays, fixed order costs, and storage costs. Firms optimally hold inventories that depend on the source of sup- ply, domestic or imported. Increases in shipping times are contractionary, raise prices, and increase stockouts, particularly for goods intensive in delayed inputs. These effects are larger when inventories are already at low levels. The paper fits the model to the United States and global economies over 2020|2022 and estimates large aggregate effects of supply disruptions. The model predicts that the boost in outpu t from reducing delays will be smaller than the contraction from the waning effects of stimulus.

Date: 2023-02-13
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Related works:
Journal Article: The aggregate effects of global and local supply chain disruptions: 2020–2022 (2023)
Working Paper: The Aggregate Effects of Global and Local Supply Chain Disruptions: 2020–2022 (2023)
Chapter: The Aggregate Effects of Global and Local Supply Chain Disruptions: 2020–2022 (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:10303

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