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

We study the causal effects and policy implications of global supply chain disruptions. We construct a
new index of supply chain disruptions from the mandatory automatic identification system data of
container ships, developing a novel spatial clustering algorithm that determines real-time congestion from
the position, speed, and heading of container ships in major ports around the globe. We develop a model
with search frictions between producers and retailers that links spare productive capacity with congestion
in the goods market and the responses of output and prices to supply chain shocks. The co-movements
of output, prices, and spare capacity yield unique identifying restrictions for supply chain disturbances
that allow us to study the causal effects of such disruptions. We document how supply chain shocks
drove inflation during 2021 but that, in 2022, traditional demand and supply shocks also played an
important role in explaining inflation. Finally, we show how monetary policy is more effective in taming
inflation after a global supply chain shock than in regular circumstances.