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

Author

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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/research/discussion-papers/archive/dp160
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    Citations

    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

    Citations

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    Cited by:

    1. Carl-Christian Groh, 2024. "Big Data and Inequality," CRC TR 224 Discussion Paper Series crctr224_2024_555, University of Bonn and University of Mannheim, Germany.
    2. Matthias Meier & Timo Reinelt, 2024. "Monetary Policy, Markup Dispersion, and Aggregate TFP," The Review of Economics and Statistics, MIT Press, vol. 106(4), pages 1012-1027, July.
    3. Julio L. Ortiz, 2022. "Spread Too Thin: The Impact of Lean Inventories," International Finance Discussion Papers 1342, Board of Governors of the Federal Reserve System (U.S.).
    4. Idossou Marius Adom & Immo Schott, 2024. "Input Delays, Firm Dynamics, and Misallocation in Sub-Saharan Africa," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 53, pages 147-172, July.
    5. Matteo Bizzarri, 2024. "Dynamic Diffusion in Production Networks," CSEF Working Papers 709, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    6. Ernest Liu & Aleh Tsyvinski, 2021. "Dynamical Structure and Spectral Properties of Input-Output Networks," Working Papers 2021-13, Princeton University. Economics Department..
    7. Hiroshi Mukunoki, 2022. "Comment on “How COVID‐19 Medical Supply Shortages Led to Extraordinary Trade and Industrial Policy”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 17(1), pages 138-139, January.
    8. Meier, Matthias & Pinto, Eugenio, 2024. "COVID-19 Supply Chain Disruptions," European Economic Review, Elsevier, vol. 162(C).
    9. Hyunseung Oh & Choongryul Yang & Chamna Yoon, 2024. "Land development and frictions to housing supply over the business cycle," Finance and Economics Discussion Series 2024-010, Board of Governors of the Federal Reserve System (U.S.).

    More about this item

    Keywords

    Time to build; supply chain disruptions; business cycles;
    All these keywords.

    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

    NEP fields

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