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

Author

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

Abstract

We study the aggregate effects of supply-chain disruptions in the post-pandemic period in a heterogeneous-firm, general equilibrium model with input-output linkages and a rich set of supply chain frictions: uncertain shipping delays, fixed order costs, and storage costs. Firms optimally hold inventories that depend on the source of supply, domestic or imported. Increases in shipping times are contractionary, raise prices, and increase stockouts, particularly for goods intensive in delayed inputs. These effects are larger when inventories are already at low levels. We fit the model to the U.S. and global economies from 2020–2022 and estimate large aggregate effects of supply disruptions. Our model predicts that the boost in output from reducing delays will be smaller than the contraction from the waning effects of stimulus.

Suggested Citation

  • George A. Alessandria & Shafaat Y. Khan & Armen Khederlarian & Carter B. Mix & Kim J. Ruhl, 2023. "The Aggregate Effects of Global and Local Supply Chain Disruptions: 2020–2022," NBER Working Papers 30849, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30849
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    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • F1 - International Economics - - Trade
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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