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Assessing the Impact of Supply Disruptions on the Global Pandemic Recovery

Author

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  • Harri Kemp
  • Mr. Rafael A Portillo
  • Marika Santoro

Abstract

We estimate the role of (pre-Ukraine war) supply disruptions in constraining the Covid-19 pandemic recovery, for several advanced economies and emerging markets, and globally. We rely on two approaches. In the first approach, we use sign-restricted Vector Auto Regressions (SVAR) to identify supply and demand shocks in manufacturing, based on the co-movement of surveys on new orders and suppliers’ delivery times. The effects of these shocks on industrial production and GDP are recovered through a combination of local projection methods and the input-output framework in Acemoglu et al. (2016). In the second approach, we use the IMF’s G20 model to gauge the importance of supply shocks in jointly driving activity and inflation surprises. We find that supply disruptions subtracted between 0.5 and 1.2 percent from global value added during the global recovery in 2021, while also adding about 1 percent to global core inflation that same year.

Suggested Citation

  • Harri Kemp & Mr. Rafael A Portillo & Marika Santoro, 2023. "Assessing the Impact of Supply Disruptions on the Global Pandemic Recovery," IMF Working Papers 2023/042, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2023/042
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    Cited by:

    1. Roberto A. De Santis, 2024. "Supply Chain Disruption and Energy Supply Shocks: Impact on Euro-Area Output and Prices," International Journal of Central Banking, International Journal of Central Banking, vol. 20(2), pages 193-235, April.

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