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Supply Chain Disruptions, Time to Build, and the Business Cycle

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  • Matthias Meier

    ()

Abstract

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.

Suggested Citation

  • Matthias Meier, 2020. "Supply Chain Disruptions, Time to Build, and the Business Cycle," CRC TR 224 Discussion Paper Series crctr224_2020_160, University of Bonn and University of Mannheim, Germany.
  • Handle: RePEc:bon:boncrc:crctr224_2020_160
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    File URL: https://www.crctr224.de/en/research-output/discussion-papers/discussion-papers#DP160
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Supply Chain Disruptions, Time to Build, and the Business Cycle
      by Christian Zimmermann in NEP-DGE blog on 2020-03-23 03:19:51

    More about this item

    Keywords

    Time to build; supply chain disruptions; business cycles;

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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