The macroeconomic effects of global supply chain disruptions
Finck, David; Tillmann, Peter (29.12.2022)
Numero
14/2022Julkaisija
Bank of Finland
2022
Julkaisun pysyvä osoite on
https://urn.fi/URN:ISBN:978-952-323-429-1Tiivistelmä
Highly interconnected global supply chains make countries vulnerable to sup ply chain disruptions. This paper estimates the macroeconomic effects of global
supply chain shocks for the euro area. Our empirical model combines busi ness cycle variables with data from international container trade. Using a novel
identification scheme, we augment conventional sign restrictions on the impulse
responses by narrative information about three episodes: the Tohoku earthquake ¯
in 2011, the Suez Canal obstruction in 2021, and the Shanghai backlog in 2022.
We show that a global supply chain shock causes a drop in euro area real economic
activity and a strong increase in consumer prices. Over a horizon of one year,
the global supply chain shock explains about 30% of inflation dynamics. We
also use regional data on supply chain pressure to isolate shocks originating in
China. Our results show that supply chain disruptions originating in China are
an important driver for unexpected movements in industrial production, while
disruptions originating outside China are an especially important driver for the
dynamics of consumer prices.
supply chain shocks for the euro area. Our empirical model combines busi ness cycle variables with data from international container trade. Using a novel
identification scheme, we augment conventional sign restrictions on the impulse
responses by narrative information about three episodes: the Tohoku earthquake ¯
in 2011, the Suez Canal obstruction in 2021, and the Shanghai backlog in 2022.
We show that a global supply chain shock causes a drop in euro area real economic
activity and a strong increase in consumer prices. Over a horizon of one year,
the global supply chain shock explains about 30% of inflation dynamics. We
also use regional data on supply chain pressure to isolate shocks originating in
China. Our results show that supply chain disruptions originating in China are
an important driver for unexpected movements in industrial production, while
disruptions originating outside China are an especially important driver for the
dynamics of consumer prices.