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  5. Supply Chains and the Macroeconomy
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Supply Chains and the Macroeconomy

Paper Session

Monday, Jan. 5, 2026 1:00 PM - 3:00 PM (EST)

Philadelphia Marriott Downtown, Room 305
Hosted By: Society for Economic Dynamics
  • Chair: Diego Känzig, Northwestern University

Measuring Shortages since 1900

Matteo Iacoviello
,
Federal Reserve Board
Dario Caldara
,
Federal Reserve Board
David Yu
,
University of California-Los Angeles

Abstract

This paper introduces a monthly shortage index spanning 1900 to the present, constructed from 25 million newspaper articles. The index captures shortages across labor, materials, goods, and energy, and spikes during economic crises and wars. We validate the index and show that it provides information beyond traditional macroeconomic indicators. Using predictive regressions and structural VAR models, we find that shortages are associated with persistently higher inflation and lower economic activity. Our analysis reveals that post-pandemic shortages and inflation were primarily driven by supply forces—with demand developments playing a less important role.

The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory

Yiliang Li
,
University of International Business and Economics
Xiwen Bai
,
Tsinghua University
Jesús Fernández-Villaverde
,
University of Pennsylvania
Francesco Zanetti
,
Oxford University

Abstract

We study the causal effects of global supply chain disruptions by constructing a new index of real-time port congestion using Automatic Identification System data from container ships and a spatial clustering algorithm. We develop a model with search frictions between producers and retailers that links upstream production slack to downstream supply shortages and captures output and price responses to supply chain shocks. The co-movements of output, prices, spare capacity, and market tightness provide novel identification restrictions. We find that demand and supply shocks drove U.S. disinflation in 2020, while the inflation surge in 2021 was driven mainly by supply chain shocks.

Supply Chain Constraints and Inflation

Callum Jones
,
Federal Reserve Board
Diego Comin
,
Dartmouth College
Robert Johnson
,
University of Notre Dame

Abstract

We develop a New Keynesian framework to evaluate how potentially binding capacity constraints, and shocks to them, shape inflation. We show that binding constraints for domestic and foreign producers shift domestic and import price Phillips Curves up. Further, data on prices and quantities together identify whether constraints bind due to increased demand or reductions in capacity. Applying the model to interpret recent US data, we find that binding constraints in the goods sector explain half of the increase in inflation during 2021-2022. In particular, tight capacity served to amplify the impact of loose monetary policy in 2021, fueling the inflation takeoff.

The Macroeconomic Effects of Supply Chain Shocks: Evidence from Global Shipping Disruptions

Diego Känzig
,
Northwestern University
Ramya Raghavan
,
Northwestern University

Abstract

This paper studies the macroeconomic consequences of global supply chain disruptions, focusing on maritime choke points critical to international trade. We identify supply chain shocks based on disruptions at key locations like the Suez and Panama Canal, using narrative accounts and high-frequency financial data. These shocks lead to a significant and persistent increase in shipping costs, which in turn has substantial economic consequences. Economic activity falls significantly and producer and consumer prices rise persistently. The persistently elevated shipping costs also lead to a sluggish expansion of the world merchant fleet, a significant increase in measures of supply chain shortages but are not associated with changes in geopolitical risk, consistent with our interpretation of exogenous supply chain disruptions. We use our estimates to discipline a network model of the U.S. economy and estimate key input elasticities.
JEL Classifications
  • E3 - Prices, Business Fluctuations, and Cycles
  • F6 - Economic Impacts of Globalization