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Commodity price shocks, supply chain disruptions and U.S. inflation

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  • Diaz, Elena Maria
  • Cunado, Juncal
  • de Gracia, Fernando Perez

Abstract

This paper analyzes the impact of commodity price shocks and global supply chain disruptions on U.S. inflation rates. Based on the idea that the inflationary effect of particular commodities is time-varying, our main contribution is to construct a Cost-Push Commodity (CPC) factor through a genetic algorithm which allows to recursively select the combination of commodity prices that best explain U.S. inflation over time. When this factor is included into a Structural Vector Autoregressive (SVAR) model, average and time-varying impulse response functions show how the U.S. inflation rate has responded to commodity price shocks and supply chain disruptions over the sample period, including the crisis caused by the COVID-19 pandemic. Important policy implications can be derived from these results.

Suggested Citation

  • Diaz, Elena Maria & Cunado, Juncal & de Gracia, Fernando Perez, 2023. "Commodity price shocks, supply chain disruptions and U.S. inflation," Finance Research Letters, Elsevier, vol. 58(PC).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pc:s154461232300867x
    DOI: 10.1016/j.frl.2023.104495
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    7. William Ginn & Jamel Saadaoui, 2024. "Impact of Supply Chain Disruptions on Financial Leverage," Working Papers 2024.11, International Network for Economic Research - INFER.
    8. Somani, Dhanashree & Gupta, Rangan & Karmakar, Sayar & Plakandaras, Vasilios, 2025. "Supply bottlenecks and machine learning forecasting of international stock market volatility," Finance Research Letters, Elsevier, vol. 86(PG).
    9. Omid Asadollah & Linda Schwartz Carmy & Md. Rezwanul Hoque & Hakan Yilmazkuday, 2024. "Geopolitical risk, supply chains, and global inflation," The World Economy, Wiley Blackwell, vol. 47(8), pages 3450-3486, August.
    10. Corey Williams, 2025. "Political Uncertainty Cycles and the Impact of Oil Shocks on Supply Chain Pressures," Economies, MDPI, vol. 13(6), pages 1-16, June.
    11. Yang, Shaopeng & Fu, Yuxi, 2025. "Interconnectedness among supply chain disruptions, energy crisis, and oil market volatility on economic resilience," Energy Economics, Elsevier, vol. 143(C).
    12. Fan, Congying & Peng, Ke, 2025. "How does supply chain finance drive corporate green transition? The role of credit resource availability," Finance Research Letters, Elsevier, vol. 86(PA).
    13. Ginn, William, 2024. "Global supply chain disruptions and financial conditions," Economics Letters, Elsevier, vol. 239(C).
    14. Jia, Yiqing & Liu, Yang & Taghizadeh-Hesary, Farhad, 2025. "The nexus among geopolitical risk, metal prices, and global supply chain pressure: Evidence from the TVP-SV-VAR approach," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 1776-1789.
    15. Polat, Onur & Somani, Dhanashree & Gupta, Rangan & Karmakar, Sayar, 2025. "Shortages and machine-learning forecasting of oil returns volatility: 1900–2024," Finance Research Letters, Elsevier, vol. 79(C).
    16. Ananya Bhatia & Jagdeep Kumar, 2025. "Assessing the Impact of COVID-19 on Financial Performance of Public and Private Banks in India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 23(2), pages 601-620, June.
    17. Sunil Tiwari & Panayiotis Tzeremes & Emad Kazemzadeh & Hayet Soltani & Buhari Doğan, 2026. "Navigating the Future: AI, Global Supply Chains, and ESG for Sustainable Development," Sustainable Development, John Wiley & Sons, Ltd., vol. 34(S2), pages 403-421, March.
    18. Ginn, William & Saadaoui, Jamel, 2025. "Impact of supply chain pressures on financial leverage," International Review of Financial Analysis, Elsevier, vol. 98(C).
    19. Wang, Haibo, 2025. "Assessing dynamic connectedness in global supply chain infrastructure portfolios: The impact of risk factors and extreme events," Global Finance Journal, Elsevier, vol. 67(C).
    20. Mawuli Segnon & Bjorn Schulte-Tillmann & Riza Demirer & Rangan Gupta, 2025. "Deglobalization and Foreign Exchange Volatility: The Role of Supply Chain Pressures," Working Papers 202506, University of Pretoria, Department of Economics.
    21. Zhangying Li & O-Chia Chuang & Rangan Gupta & Elie Bouri, 2025. "The Roles of Global Supply Chain Pressure and Economic Conditions in Forecasting the VaR of Commodity Markets: A Quantile GARCH-MIDAS Approach," Working Papers 202528, University of Pretoria, Department of Economics.
    22. Audi, Marc & Poulin, Marc & Ahmad, Khalil & Ali, Amjad, 2025. "Quantile Analysis of Oil Price Shocks and Stock Market Performance: A European Perspective," MPRA Paper 124295, University Library of Munich, Germany.
    23. Matteo Bonato & Rangan Gupta & Christian Pierdzioch, 2024. "Do Shortages Forecast Aggregate and Sectoral U.S. Stock Market Realized Variance? Evidence from a Century of Data," Working Papers 202450, University of Pretoria, Department of Economics.
    24. Ko, Dong Gyun, 2025. "Did the American Rescue Plan cause inflation? A synthetic control approach," Economic Modelling, Elsevier, vol. 143(C).

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    Keywords

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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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