Global Supply Chain Disruptions and Inflation During the COVID-19 Pandemic
Abstract
We investigate the role supply chain disruptions during the COVID-19 pandemic played in U.S. producer price index (PPI) inflation. We exploit pre-pandemic cross-industry variation in sourcing patterns across countries and interact it with measures of international supply chain bottlenecks during the pandemic. We show that exposure to global supply chain disruptions played a significant role in U.S. cross-industry PPI inflation between January and November 2021. If bottlenecks had followed the same path as in 2019, PPI inflation in the manufacturing sector would have been 2 percentage points lower in January 2021 and 20 percentage points lower in November 2021.
Policy citation: Cited in the 2024 Economic Report of the President (Council of Economic Advisers), Chapter 5, “International Trade and Investment Flows,” p. 198, as evidence that pandemic-related supply chain disruptions raised U.S. prices.
Also cited in written testimony by Adam S. Hersh (Economic Policy Institute) to the U.S. House Oversight Subcommittee on Economic Growth, Energy Policy, and Regulatory Affairs, for the hearing “Made in the USA: Igniting the Industrial Renaissance of the United States,” April 29, 2025.
Jesse LaBelle
Fourth-Year Economics PhD Candidate
Jesse LaBelle is a fourth-year PhD Candidate in the Northwestern University Economics Department.