Do Supply Chain Disruptions Matter for Global Economic Conditions?

Abstract

The COVID-19 pandemic and its aftermath exposed the vulnerabilities of global supply chains, leading to widespread delays and shortages that highlighted the interconnectedness of economies. This paper examines the global impact of supply chain disruptions on economic conditions, drawing on literature related to economic uncertainty, global economic integration, and the global supply chain disruptions. Using a Bayesian Vector Autoregression (BVAR) model, we analyze the effect of supply chain shocks. The empirical findings reveal that these disruptions significantly influence global economic stability, particularly through their impact on aggregate inflation and the policy responses that accompanies them.

Keywords: Supply Chain, Business Cycles, Global Economic Uncertainty

JEL Classification: E31, E32, D24