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The Macroeconomics of Supply Chain Disruptions

Author

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  • Daron Acemoglu
  • Alireza Tahbaz-Salehi

Abstract

This paper develops a model to study the macroeconomic implications of supply chain disruptions with three key ingredients: (i) a firm-level network of customized supplier–customer links that generate relationship-specific productivity gains; (ii) bargaining over these relationship-specific surpluses; and (iii) an extensive margin of adjustment, whereby firms decide to form or sever relations with suppliers and customers. We establish equilibrium existence and uniqueness, provide characterization results, and present a number of comparative statics that show how supply chains and aggregate output respond to shocks. We also show that equilibrium supply chains are inefficient and exhibit an inherent fragility: small shocks can lead to discontinuous changes in output, even though the efficient allocation is always continuous in the same shocks. We explore several macroeconomic implications of this fragility.

Suggested Citation

  • Daron Acemoglu & Alireza Tahbaz-Salehi, 2025. "The Macroeconomics of Supply Chain Disruptions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 92(2), pages 656-695.
    • Handle: RePEc:oup:restud:v:92:y:2025:i:2:p:656-695.
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    File URL: http://hdl.handle.net/10.1093/restud/rdae038
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