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The Aggregate Effects of Global and Local Supply Chain Disruptions: 2020–2022

In: NBER International Seminar on Macroeconomics 2022

Author

Listed:
  • George A. Alessandria
  • Shafaat Y. Khan
  • Armen Khederlarian
  • Carter B. Mix
  • Kim J. Ruhl

Abstract

This paper studies the aggregate effects of supply chain disruptions in the post-pandemicperiod in a heterogeneous-firm, general equilibrium model with input-output linkages and a rich set of supply chainfrictions: uncertain shipping delays, fixed order costs, and storage costs. Firms optimally hold inventories that dependon the source of sup- ply, domestic or imported. Increases in shipping times are contractionary, raise prices, andincrease stockouts, particularly for goods intensive in delayed inputs. These effects are larger when inventoriesare already at low levels. The paper fits the model to the United States and global economies over 2020|2022 andestimates large aggregate effects of supply disruptions. The model predicts that the boost in output from reducing delayswill be smaller than the contraction from the waning effects of stimulus.
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Suggested Citation

  • George A. Alessandria & Shafaat Y. Khan & Armen Khederlarian & Carter B. Mix & Kim J. Ruhl, 2022. "The Aggregate Effects of Global and Local Supply Chain Disruptions: 2020–2022," NBER Chapters, in: NBER International Seminar on Macroeconomics 2022, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14898
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    Cited by:

    1. ZHANG Hongyong & DOAN Thi Thanh Ha, 2023. "Global Sourcing and Firm Inventory during the Pandemic," Discussion papers 23018, Research Institute of Economy, Trade and Industry (RIETI).
    2. Xiwen Bai & Jesús Fernández-Villaverde & Yiliang Li & Francesco Zanetti, 2024. "The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory," Economics Series Working Papers 1033, University of Oxford, Department of Economics.
    3. Alejandro G. Graziano & Yuan Tian, 2023. "Trade Disruptions Along the Global Supply Chain," Working Papers 243, Red Nacional de Investigadores en Economía (RedNIE).
    4. Viral V. Acharya & Matteo Crosignani & Tim Eisert & Christian Eufinger, 2023. "How Do Supply Shocks to Inflation Generalize? Evidence from the Pandemic Era in Europe," NBER Working Papers 31790, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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