Supply Chain Disruptions, Time to Build, and the Business Cycle
CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany
We provide new evidence that (i) time to build is volatile and countercyclical, and that (ii) supply chain disruptions lengthen time to build. Motivated by these findings, we develop a general equilibrium model in which heterogeneous firms face non-convex adjustment costs and multi-period time to build. In the model, supply chain disruptions lengthen time to build. Calibrating the model to US micro data, we show that disruptions, which lengthen time to build by 1 month, depress GDP by 1% and aggregate TFP by 0.2%. Structural vector autoregressions corroborate the quantitative importance of supply chain disruptions.
Keywords: Time to build; supply chain disruptions; business cycles (search for similar items in EconPapers)
JEL-codes: E01 E22 E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dge and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2020_160
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