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Global Supply Chain Disruptions and Inflation During the COVID-19 Pandemic

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  • Jesse LaBelle
  • Ana Maria Santacreu

Abstract

We investigate the role supply chain disruptions during the COVID-19 pandemic played in U.S. producer price index (PPI) inflation. We exploit pre-pandemic cross-industry variation in sourcing patterns across countries and interact it with measures of international supply chain bottlenecks during the pandemic. We show that exposure to global supply chain disruptions played a significant role in U.S. cross-industry PPI inflation between January and November 2021. If bottlenecks had followed the same path as in 2019, PPI inflation in the manufacturing sector would have been 2 percentage points lower in January 2021 and 20 percentage points lower in November 2021.

Suggested Citation

  • Jesse LaBelle & Ana Maria Santacreu, 2022. "Global Supply Chain Disruptions and Inflation During the COVID-19 Pandemic," Review, Federal Reserve Bank of St. Louis, vol. 104(2), pages 78-91.
    • Handle: RePEc:fip:fedlrv:93685
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    References listed on IDEAS

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    1. Jongrim Ha & M. Ayhan Kose & Franziska Ohnsorge, 2021. "Inflation During the Pandemic: What Happened? What is Next?," Koç University-TUSIAD Economic Research Forum Working Papers 2108, Koc University-TUSIAD Economic Research Forum.
    2. Jesse LaBelle & Fernando Leibovici & Ana Maria Santacreu, 2021. "Global Value Chains and U.S. Economic Activity During COVID-19," Review, Federal Reserve Bank of St. Louis, vol. 103(3), pages 271-288, May.
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    Citations

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    Cited by:

    1. Hall, Stephen G. & Tavlas, George S. & Wang, Yongli, 2023. "Drivers and spillover effects of inflation: The United States, the euro area, and the United Kingdom☆," Journal of International Money and Finance, Elsevier, vol. 131(C).
    2. Elena-Aura GRIGORESCU & Dimitrie-Daniel PLACINTA & Florin-Valeriu PANTELIMON & Bogdan-Stefan POSEDARU & Andrei BOBOCEA & Corina-Marina MIREA, 2022. "A Brief Inquiry into the Evolution of Inflation during the Fall of Communism, Global Financial Crisis (2008-2009) and COVID-19 Pandemic," Informatica Economica, Academy of Economic Studies - Bucharest, Romania, vol. 26(3), pages 26-36.
    3. Francois de Soyres & Ana Maria Santacreu & Henry L. Young, 2023. "Demand-Supply Imbalance during the COVID-19 Pandemic: The Role of Fiscal Policy," Review, Federal Reserve Bank of St. Louis, vol. 105(1), pages 21-50, January.
    4. Jackson, Emerson Abraham & Kamara, Purity & Kamara, Abdulsalam, 2022. "Determinants of Inflation in Sierra Leone," MPRA Paper 117278, University Library of Munich, Germany, revised Apr 2023.
    5. Meyer, Brent H. & Prescott, Brian C. & Sheng, Xuguang Simon, 2023. "The impact of supply chain disruptions on business expectations during the pandemic," Energy Economics, Elsevier, vol. 126(C).
    6. St-Pierre, Marc, 2023. "On market power and inflation," Economics Letters, Elsevier, vol. 226(C).
    7. Òscar Jordà & Celeste Liu & Fernanda Nechio & Fabián Rivera-Reyes, 2022. "Wage Growth When Inflation Is High," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2022(25), pages 1-6, September.
    8. Candelon, Bertrand & Moura, Rubens, 2023. "Sovereign yield curves and the COVID-19 in emerging markets," Economic Modelling, Elsevier, vol. 127(C).

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    More about this item

    Keywords

    COVID-19; supply chains; inflation;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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