Supply chain disruptions and the effects on the global economy

Maria Grazia Attinasi, Mirco Balatti, Michele Mancini and Luca Metelli ()

Economic Bulletin Boxes, 2022, vol. 8

Abstract: During the economic recovery from the COVID-19 pandemic, supply and demand imbalances have put a strain on global production networks. We develop a two-step vector autoregression (VAR) procedure to gauge the impact of supply chain shocks on activity, trade and prices. In the first step, we use a sign restricted structural VAR with PMI output and PMI delivery times to recover the supply chain shock, which is our proxy for measuring episodes of supply chain strains. In the second step, we plug such shocks as exogenous variables into a companion VAR with endogenous real and nominal variables. Counterfactual scenarios are constructed to assess the effects of the supply bottlenecks, which are having a negative impact on real variables and pushing up prices. A medium-term assessment of the supply chain strains is also provided. JEL Classification: C32, E30, F40, F62

Keywords: activity; global production networks; inflation; supply bottlenecks; supply chain; trade (search for similar items in EconPapers)
Date: 2022-01
Note: 930374
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Citations: View citations in EconPapers (3)

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