Delayed Inflation in Supply Chains
Delayed Inflation in Supply Chains

Author: Robert Minton

Publisher:

Published: 2023

Total Pages: 0

ISBN-13:

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How fully and quickly do supply chains transmit commodity price movements into inflation? In a production network with sticky prices, we show that the network delays propagation of commodity price shocks to downstream firms. This result holds even if firms are forward-looking. In the long run, the shocks are passed through fully, even to downstream firms. We confirm the theory structurally and in reduced form, using shift-share designs exploiting firms' differential uses of commodities through their networks. We additionally find forward-looking responses to oil price movements but inattentive responses for other commodities. That is, we find that firms react more to changes in oil spot prices accompanied by larger movements in the futures curve; further, firms anticipate gradual pass-through of oil prices to their costs and update prices accordingly. Applying our model, we show that delayed network propagation of oil price movements accounts for 16 % of the monthly variation in Core PCE inflation and forecasts its future path. Purging all of oil's network effects in the current inflationary episode reveals that underlying inflation continued to increase during the second half of 2022.

The Consequences of Falling Behind the Curve: Inflation Shocks and Policy Delays Under Rational and Behavioral Expectations
The Consequences of Falling Behind the Curve: Inflation Shocks and Policy Delays Under Rational and Behavioral Expectations

Author: Ms. Mai Hakamada

Publisher: International Monetary Fund

Published: 2024-03

Total Pages: 52

ISBN-13:

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Central banks in major industrialized economies were slow to react to the surge in inflation that began in early 2021. The proximate causes of this surge were the supply chain disruptions associated with the easing of COVID restrictions, fiscal policies designed to cushion the economic impact of COVID, and the impact on commodity prices and supply chains of the war in Ukraine. We investigate the consequences of policy delay in responding to inflation shocks. First, using a simple three-period model, we show how policy delay worsens inflation outcomes, but can mitigate or even reverse the output decline that occurs when policy responds without delay. Then, using a calibrated new Keynesian framework and two measures of loss that incorporate a “balanced approach” to weigh inflation and the output gap, we find that loss is monotonically increasing in the length of the delay. Loss is reduced if policy, when it does react, is more aggressive. To investigate whether these results are sensitive to the assumption of rational expectations, we consider cognitive discounting as an alternative assumption about expectations. With cognitive discounting, forward guidance is less powerful and results in a reduction in the costs of delay. Under either assumption about expectations, the costs of a short delay can be eliminated by adopting a less inertial policy rule and a more aggressive response to inflation.

Supply Chain Shortages, Large Firms' Market Power and Inflation
Supply Chain Shortages, Large Firms' Market Power and Inflation

Author: Francesco Franzoni

Publisher:

Published: 2023

Total Pages: 0

ISBN-13:

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We suggest an equilibrium mechanism for the widely debated argument that “greedflation” has fostered widespread price hikes. We construct firm and industry-level measures of supply chain backlogs and delivery delays and provide evidence that supply chain shortages lead to a decrease in competition at the industry level. We show that “star” firms acquire market shares and increase their markups and profitability relative to the smaller firms in the industry. We also show that the large increase in supply chain backlogs during the COVID-19 pandemic can help explain about 19% of the US inflation in industries with more asymmetric firm size distribution, where supply chain shortages are more likely to benefit large firms at the expense of smaller firms. Economic magnitudes are comparable in the international sample.

Global Supply Chain Disruptions: Challenges for Inflation and Monetary Policy in Sub-Saharan Africa
Global Supply Chain Disruptions: Challenges for Inflation and Monetary Policy in Sub-Saharan Africa

Author: Zo Andriantomanga

Publisher: International Monetary Fund

Published: 2023-02-24

Total Pages: 41

ISBN-13:

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The Covid-19 pandemic has led to a large disruption of global supply chains. This paper studies the implications of supply chain disruptions for inflation and monetary policy in sub-Saharan Africa. Increases in supply chain pressures have had a sizeable impact on headline, food, and tradable inflation for a panel of 29 sub-Saharan African countries from 2000 to 2022. Our findings suggest that central banks can stabilize inflation and output more efficiently by monitoring global supply chains and adjusting the monetary policy stance before the disruptions have fully passed through into all inflation components. The gains from monitoring supply chain disruptions are particularly large for open economies which tend to experience outsized second-round effects on the prices of non-tradable goods and services.

Supply Chain Coordination under Uncertainty
Supply Chain Coordination under Uncertainty

Author: Tsan-Ming Choi

Publisher: Springer Science & Business Media

Published: 2011-08-14

Total Pages: 651

ISBN-13: 3642192572

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Channel coordination is a core subject of supply chain management. Over the past decade, much research effort has been devoted to exploring the detailed mechanisms for achieving supply chain coordination under uncertainty, generating many fruitful analytical and empirical results. Despite the abundance of research results, there is an absence of a comprehensive reference source that provides state-of-the-art findings on both theoretical and applied research on the subject. In addition, with the advance of knowledge and technologies, many new topics on supply chain coordination under uncertainty have appeared in recent years. This handbook extensively examines supply chain coordination challenges with a focal point on discovering innovative measures that can help tackle the existing and emerging challenges. The book is organized into five parts, which include chapters on innovative analytical models for coordination, channel power and bargaining, technological advancements and applications, empirical analysis, cases studies and review. This handbook provides new empirical and analytical results with precious insights, which will not only help supply chain agents to understand more about the latest measures for supply chain coordination under uncertainty, but also help practitioners and researchers to know how to improve supply chain performance based on innovative methods.

Strengthening Post-Hurricane Supply Chain Resilience
Strengthening Post-Hurricane Supply Chain Resilience

Author: National Academies of Sciences, Engineering, and Medicine

Publisher: National Academies Press

Published: 2020-04-02

Total Pages: 137

ISBN-13: 0309494583

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Resilient supply chains are crucial to maintaining the consistent delivery of goods and services to the American people. The modern economy has made supply chains more interconnected than ever, while also expanding both their range and fragility. In the third quarter of 2017, Hurricanes Harvey, Irma and Maria revealed some significant vulnerabilities in the national and regional supply chains of Texas, Florida, the U.S. Virgin Islands, and Puerto Rico. The broad impacts and quick succession of these three hurricanes also shed light on the effectiveness of the nation's disaster logistics efforts during response through recovery. Drawing on lessons learned during the 2017 hurricanes, this report explores future strategies to improve supply chain management in disaster situations. This report makes recommendations to strengthen the roles of continuity planning, partnerships between civic leaders with small businesses, and infrastructure investment to ensure that essential supply chains will remain operational in the next major disaster. Focusing on the supply chains food, fuel, water, pharmaceutical, and medical supplies, the recommendations of this report will assist the Federal Emergency Management Agency as well as state and local officials, private sector decision makers, civic leaders, and others who can help ensure that supply chains remain robust and resilient in the face of natural disasters.

The Distributional Implications of the Impact of Fuel Price Increases on Inflation
The Distributional Implications of the Impact of Fuel Price Increases on Inflation

Author: Mr. Kangni R Kpodar

Publisher: International Monetary Fund

Published: 2021-11-12

Total Pages: 34

ISBN-13: 1616356154

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This paper investigates the response of consumer price inflation to changes in domestic fuel prices, looking at the different categories of the overall consumer price index (CPI). We then combine household survey data with the CPI components to construct a CPI index for the poorest and richest income quintiles with the view to assess the distributional impact of the pass-through. To undertake this analysis, the paper provides an update to the Global Monthly Retail Fuel Price Database, expanding the product coverage to premium and regular fuels, the time dimension to December 2020, and the sample to 190 countries. Three key findings stand out. First, the response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies than in advanced economies. Second, we show that past studies using crude oil prices instead of retail fuel prices to estimate the pass-through to inflation significantly underestimate it. Third, while the purchasing power of all households declines as fuel prices increase, the distributional impact is progressive. But the progressivity phases out within 6 months after the shock in advanced economies, whereas it persists beyond a year in developing countries.

Challenges, Opportunities and Solutions in Structural Engineering and Construction
Challenges, Opportunities and Solutions in Structural Engineering and Construction

Author: Nader Ghafoori

Publisher: CRC Press

Published: 2009-10-29

Total Pages: 1032

ISBN-13: 0203859928

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Challenges, Opportunities and Solutions in Structural Engineering and Construction addresses the latest developments in innovative and integrative technologies and solutions in structural engineering and construction, including: Concrete, masonry, steel and composite structures; Dynamic impact and earthquake engineering; Bridges and

Global Value Chain and Inflation Dynamics
Global Value Chain and Inflation Dynamics

Author: Vu Chau

Publisher: International Monetary Fund

Published: 2024-03-22

Total Pages: 57

ISBN-13:

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We study the inflationary impacts of pandemic lockdown shocks and fiscal and monetary stimulus during 2020-2022 using a novel harmonized dataset of sectoral producer price inflation and input-output linkages for more than 1000 sectors in 53 countries. The inflationary impact of shocks is identified via a Bartik shift-share design, where shares reflect the heterogeneous sectoral exposure to shocks and are derived from a macroeconomic model of international production network. We find that pandemic lockdowns, and subsequent reopening policies, were the most dominant driver of global inflation in this period, especially through their impact on aggregate demand. We provide a decomposition of lockdown shock by sources, and find that between 20-30 percent of the demand effect of lockdown/reopening is due to spillover from abroad. Finally, while fiscal and monetary policies played an important role in preventing deflation in 2020, their effects diminished in the recovery years.

The Art and Science of Demand and Supply Chain Planning in Today's Complex Global Economy
The Art and Science of Demand and Supply Chain Planning in Today's Complex Global Economy

Author: Paul Myerson

Publisher: CRC Press

Published: 2023-02-24

Total Pages: 303

ISBN-13: 1000836983

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The demand and supply chain planning process for manufacturers, distributors, and retailers has evolved over the years. It has gone from a disjointed, unconnected, slow, inaccurate, fairly manual set of processes to an integrated, timely process enabled by the use and coordination of highly trained people, lean, agile processes, and cutting-edge technology. To make this set of processes work effectively, one has to fully understand and appreciate that there is an "art and science" aspect to the process which can take years of education and experience to fully understand. Essentially, this book will offer the reader a chance to fully understand the interconnected set of processes in a "best-practice" application. Furthermore, examples and cases will be used to illustrate its practical application in today’s complex global supply chain. In addition, readers will understand and be able to apply and articulate the concepts, tools, and techniques used in the efficient supply of goods and services in today’s changing global economy. It will help them to learn how businesses, through their supply chain, work both internally and with their trading partners – both upstream and downstream – to build strong relationships and integrate demand and supply planning activities across the supply chain to deliver customer value efficiently and effectively. They will learn about the tools and technologies enabling integration, and the critical drivers and key metrics of supply chain performance.