Supply Chain Networks and the Macroeconomic Expectations of Firms

Ina Hajdini, Saten Kumar, Samreen Malik, Jordan J. Norris and Mathieu Pedemonte

No 14178, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: Using a randomized control trial of approximately 1,000 firm pairs in New Zealand that have a customer-supplier relationship, we provide an information treatment to analyze both the direct effects on expectations and actions of firms receiving this information and the spillover effects on connected firms that did not directly receive information. In a follow-up three months later, we find direct and spillover effects on expectations and actions that are both significant and of comparable magnitude. An increase in expected GDP growth increases prices and employment; an increase in expected GDP uncertainty reduces prices, investment, and employment. We provide evidence that it is communication between the firms, as opposed to observable actions, driving the spillover effect on the expectations of connected firms. This is consequential as we find communication to be symmetric upstream vs downstream, while propagation via actions is asymmetric. We embed firm-to-firm communication along the supply chain in a New Keynesian pricing problem and discuss its implications for the transmission of aggregate uncertainty to firms pricing decisions and aggregate inflation.

Keywords: Firms; Macroeconomic Expectations; Networks; spillovers (search for similar items in EconPapers)
JEL-codes: D80 D81 E30 E40 E50 L14 (search for similar items in EconPapers)
Date: 2025-07
References: Add references at CitEc
Citations:

Downloads: (external link)
https://publications.iadb.org/publications/english ... tations-of-Firms.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:idb:brikps:14178

DOI: 10.18235/0013598

Access Statistics for this paper

More papers in IDB Publications (Working Papers) from Inter-American Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Felipe Herrera Library ().