Supply Chain Recessions

More on George Alessandria

Sign-up Sheet

Joint with Khan, Khederlarian, Mix and Ruhl

The abstract is:  We develop a multi-country general equilibrium model of local and global supply chains that differ in their costs, delivery times, and delivery risks. These different frictions lead to ordering and inventory holdings that differ by the source of supply. The model is consistent with prior evidence on the relationship between shipping time and trade flows. We evaluate the aggregate effects of changes in the delivery times and international trade on steady state economic activity. We also consider the impact of transitory increases in delivery times on aggregate economic activity. We discuss evidence on the effects of supply disruptions on output and prices from several episodes: Suez Canal closure, US business cycles, COVID (aggregate and across industries).