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Supply chain disruptions and the effects on the global economy

Author

Listed:
  • Attinasi, Maria Grazia
  • Balatti, Mirco
  • Mancini, Michele
  • Metelli, Luca

Abstract

During the economic recovery from the COVID-19 pandemic, supply and demand imbalances have put a strain on global production networks. We develop a two-step vector autoregression (VAR) procedure to gauge the impact of supply chain shocks on activity, trade and prices. In the first step, we use a sign restricted structural VAR with PMI output and PMI delivery times to recover the supply chain shock, which is our proxy for measuring episodes of supply chain strains. In the second step, we plug such shocks as exogenous variables into a companion VAR with endogenous real and nominal variables. Counterfactual scenarios are constructed to assess the effects of the supply bottlenecks, which are having a negative impact on real variables and pushing up prices. A medium-term assessment of the supply chain strains is also provided. JEL Classification: C32, E30, F40, F62

Suggested Citation

  • Attinasi, Maria Grazia & Balatti, Mirco & Mancini, Michele & Metelli, Luca, 2022. "Supply chain disruptions and the effects on the global economy," Economic Bulletin Boxes, European Central Bank, vol. 8.
    • Handle: RePEc:ecb:ecbbox:2022:0008:1
    Note: 930374
    as

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    File URL: https://www.ecb.europa.eu//press/economic-bulletin/focus/2022/html/ecb.ebbox202108_01~e8ceebe51f.en.html
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    Citations

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    Cited by:

    1. Carter, Colin A. & Steinbach, Sandro & Zhuang, Xiting, 2022. "Global Container Trade Disruptions and U.S. Agricultural Exports," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322364, Agricultural and Applied Economics Association.
    2. Carter, Colin A. & Steinbach, Sandro & Zhuang, Xiting, 2022. "Global Shipping Container Disruptions and U.S. Agricultural Exports," Working Papers 320397, International Agricultural Trade Research Consortium.

    More about this item

    Keywords

    activity; global production networks; inflation; supply bottlenecks; supply chain; trade;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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