Supply-side Disruptions Research Articles

Food inflation and monetary policy in emerging economies

The rising inflationary pressure has been linked with supply-side disruptions and rising energy and food prices against the background of the COVID-19 pandemic and the Russia-Ukraine crisis. This paper investigates the role of monetary policy in stabilizing food inflation in emerging economies (India, China, Brazil, Russia, and South Africa). We also investigate the causal linkage between monetary policy and food inflation using frequency domain-based Granger causality and find strong feedback causal effects between food inflation and monetary policy changes. Our results are robust to different estimation methodologies, possible asymmetry, and alternative model specifications, which include climate change. While oil prices, world food prices, and exchange rates have heterogeneous effects on domestic food inflation, a contractionary monetary policy stance leads to a decline in domestic food inflation in all countries. Thus, we provide strong evidence that well-coordinated macroeconomic policies in emerging economies are essential for stabilizing food inflation.

Understanding Incumbents’ Reactions to Supply-Side Disruption of the Business Ecosystem

Understanding Incumbents’ Reactions to Supply-Side Disruption of the Business Ecosystem

The Return of Inflation

Inflation, after an extended absence, is back. Its resumption reflects a combination of supply and demand factors: supply-side disruptions to trade and production associated with COVID-19; and shifts in the composition of demand to goods from services, along with strong stimulus to spending owing to support payment provided by governments. There is disagreement about what to do in response: whether central banks should continue to respond with increases in interest rates, and whether there is a role for selective wage and price controls. Above all, there is disagreement about how long the inflation problem is likely to persist.

Measuring supply-side service disruption: a systematic review of the methods for measuring disruption in the context of maternal and newborn health services in low and middle-income settings

ObjectivesDuring the COVID-19 pandemic, most essential services experienced some level of disruption. Disruption in LMICs was more severe than in HICs. Early reports suggested that services for maternal and newborn...

A two-stage capacity reservation contract model with backup sourcing considering supply side disruptions

ABSTRACT To deal with disruption at the supply side, the use of backup suppliers is among the commonly employed strategies. In this research, we derived a dual sourcing model using capacity reservation contracts for a supply chain consisting of a retailer, a primary supplier who may experience disruption, and a reliable backup supplier. This dual sourcing model is a reactive strategy that balances flexibility and redundancy to improve supply chain resilience. The aim of the proposed model is to help find optimal solutions for the reserved capacities of the retailer to the suppliers and the constructed capacities of the suppliers. It has been derived in this research that the above-mentioned reserved/constructed capacities exist uniquely. Sensitivity analyses were also conducted to examine the impact of contract parameters on decision variables. This research contributes to existing knowledge by providing deeper insights into the application of the capacity reservation contract to handle supply disruption.

Risk, arbitrage, and spatial price relationships: Insights from China's hog market under the African Swine Fever

Spatial market integration, an important means to increase market efficiency and boost economic development, is often affected by policy changes such as trade liberalization and trade restrictions. With unique weekly data on provincial hog prices, we use the 2018 outbreak of African Swine Fever (ASF) in China and the subsequent ban on cross-province shipment of hogs as a natural experiment to study dynamic spatial mechanisms underlying market integration. We employ a high-dimensional spatial model to estimate pairwise inter-province price links over several periods around the ASF outbreak for 29 Chinese provinces. Regressions reveal that a greater inter-province distance weakens the spatial price links post-ban, but not before the ban, which indicates insufficient arbitrage likely due to imperfect public information regarding ASF. The temporary market segmentation implies substantial dead-weight-loss. Our findings highlight the role of public information on risks in maintaining market integration and efficiency under supply-side disruptions.

CRITICAL REVIEW OF CHAPTER II - TRENDS IN INTERNATIONAL MARKETS: TRADE AND DEVELOPMENT REPORT 2022, (P41-67)

This critical review concentrates on Chapter II of The Trade and Development Report (TDR), which is prepared annually by the United Nations Conference on Trade and Development (UNCTAD) and presented to the General Assembly via the Secretary-General of the United Nations. TDR 2022 provides analysis of global trade trends and policy issues that affect trade and financial flows, and offers recommendations how to make the world economy fairer for all nations. Published in April 2023, the Report relays a warning of economic stagnation which will especially adversely affect developing nations. It cites supply-side disruptions and the war in Ukraine as major factors behind inflation, food and energy price increases and cost-of-living crises. It singles out monetary tightening in advanced economies and appreciating US dollar as main contributing factors in capital retreat from developing nations and increases in cost of their dollar denominated debt. TDR 2022 estimates that after having spent $379 billion of national reserves for the purpose of currency protection in 2022 alone, many developing nations are now left with dwindling central bank reserves. This begs the question, does the supremacy of some economies in relation to the global economy and their outsized influence on the global economy, warrant an attempt at new and improved central bank mission statements that should be looked at by various governments? Perhaps that effort could concentrate at articulating statements that take into account central bank actions that are intended to stabilize, protect, and expand the global economy as a whole, thus evolve today’s selfish approach by competing central banks that are single-mindedly focused on domestic circumstances. By concentrating locally, their actions are often seen as simply displacing economic pains rather than attempting to fix them. Therefore, the Report offers some recommendations how to avert negative spillovers from monetary tightening policies in advanced economies and austerity measures that accompany them. Other recommendations pertain to leveling the global economic playing field and include reforming the international legal framework governing debt, windfall taxes on excessive profits, and reigning in speculative activities in commodity markets.

Optimal Base-Stock Inventory-Management Policies of Cement Retailers under Supply-Side Disruptions

The current study aims to identify some optimal base-stock inventory-management policies that maximize the expected long-run profitability of cement retailers under potential supply-side disruptions. Unlike existing articles, the proposed economic order-quantity model considers periodically varying random demand rates of deteriorating items together with partially back-ordered shortages in the face of those random disruptions. This study computes the global concavity to execute the exemplary aspect for the optimal base-stock level under a slew of cost components and a fixed cycle length. Regarding the optimal pricing-related policies, this study proposes that cement retailers should stock from nearby supplier points. Unlike existing articles, we find that changes to either the unit-holding cost or the unit-lost sales cost have hardly any determining effect on the long-run profitability of retailers. When supply-side disruptions are more likely to occur during peak seasons, this study advocates for a planned capacity addition and higher base-stock levels of cement bags.

Supply or Demand, that is the Question: Decomposing Euro Area Inflation

This paper studies the recent trends in inflation in the euro area and estimates to what extent the current inflationary pressures are driven by demand expansion and by supply side disruptions. First of all, consumer price inflation is particularly pronounced in goods and less so in the case of services. Energy and food are the most relevant components of rising consumer prices, accounting for almost three-quarters of total headline inflation. The fact that price pressure comes mainly from sectors with a high import content suggests that disruptions along international supply chains may play a key role. The paper then focuses on producer prices at the sectoral level and presents a methodology to decompose the rise in inflation between supply and demand impulses. It finds that, in the present context, supply factors are the main driver and account for at least 80% of the current increase in producer prices in industry and in each one of the manufacturing sectors with the highest price pressures. There are nevertheless some differences across countries. These findings imply that, if repairing supply-side problems and disruptions along supply chains is the priority, then promoting the right investment may be more urgent than cooling demand down. Country heterogeneity in the relative importance of demand and supply factors, then, may lead to different degrees of effectiveness of monetary policy and to a risk of divergences.

Effects of supply chain disruptions due to COVID-19 on shareholder value

PurposeThe purpose of this research work is to examine the financial effect of supply chain disruptions (SCDs) caused by coronavirus disease 2019 (COVID-19) and how the magnitude of such effects depends on event time and space that may moderate the signaling environment for shareholder behaviors during the pandemic.Design/methodology/approachThis study analyses a sample of 206 SCD events attributed to COVID-19 made by 145 publicly traded firms headquartered in 21 countries for a period between 2020 and 2021. Change in shareholder value is estimated by employing a multi-country event study, followed by estimating the differential effect of SCDs due to the pandemic by event time and space.FindingsOn average, SCDs due to pandemic decrease shareholder value by −2.16%, which is similar to that of pre-pandemic SCDs (88 events for 2018–2019). This negative market reaction remains unchanged regardless of whether stringency measures of the firm's country become more severe. Supply-side disruptions like shutdowns result in a more negative stock market reaction than demand-side disruptions like price hikes. To shareholder value, firm's upstream or downstream position does not matter, but supply chain complexity serves as a positive signal.Originality/valueThis study provides the first empirical evidence on the financial impact of SCDs induced by COVID-19. Combining with signaling theory and event system theory, this study provides a new boundary condition that explains the impact mechanism of SCDs caused by the pandemic.

Guyana

Following the pandemic-induced recession in 2020, economic growth recovered in 2021, with non-oil GDP growth reaching 4.6 percent, despite being negatively impacted by floods. Inflation increased markedly since 2021 owing to the floods and supply-side disruptions, as well as continually rising fuel and food prices. Oil production increased and will ramp up substantially over the medium term.

Cancer Care Access in Chile's Vulnerable Populations During the COVID-19 Pandemic.

Objectives. To examine the COVID-19 pandemic's impact on cancer care access in Chile, analyzing differential effects by insurance type, gender, and age. Methods. We conducted a quasi-experimental study using interrupted time series analysis. We used multiple data sources for a broad evaluation of cancer-related health care utilization from January 2017 to December 2020. We fit negative binomial models by population groups for a range of services and diagnoses. Results. A sharp drop in oncology health care utilization in March was followed by a slow, incomplete recovery over 2020. Cumulative cancer-related services, diagnostic confirmations, and sick leaves were reduced by one third in 2020; the decrease was more pronounced among women and the publicly insured. Early diagnosis was missed in 5132 persons with 4 common cancers. Conclusions. The pandemic stressed the Chilean health system, decreasing access to essential services, with a profound impact on cancer care. Oncology service reductions preceded large-scale lockdowns and supply-side disruptions. Importantly, not all population groups were equally affected, with patterns suggesting that gender and socioeconomic inequalities were exacerbated. (Am J Public Health. 2022;112(S6):S591-S601. https://doi.org/10.2105/AJPH.2021.306587).

Post-pandemic inflation: Phillips curve, trends, drivers and lessons

After several years of very low inflation, the world economy in 2021 and 2022 has been confronted with an abrupt and persistent rise in inflation rates not seen for decades. This paper investigates the main factors behind the surge in consumer price inflation in advanced economies and possible differences across them. It assesses the relative role of excess demand arising from the reopening of economies after the COVID-19 restrictive measures, global value chain and supply-side disruptions, higher energy prices, the “base effect”, and labour market pressures. We find that prices were initially pushed up by the fast world demand recovery combined with global supply disruptions, but eventually, especially since the war in Ukraine, energy prices have become the main driver of increased inflation. Differences in the contribution of the core inflation component across advanced economies, especially between the United States and the rest, reflect differences in output gaps and labour market tightness, while unit labour cost pressures remained muted almost everywhere. Given that inflation is expected to remain elevated for longer than initially anticipated, monetary authorities are expected to become more “conservative” again, defending their credibility. Past experience suggests that, as the economic slowdown becomes inevitable, the short-term costs of a gradual and orderly monetary policy normalisation to activity and employment are probably lower than the potential longer-term costs of a more popular prolonged accommodative policy. The anchoring of inflation expectations is not a free lunch.

Portugal

After a deeper pandemic-induced recession than the rest of the euro area in 2020, the Portuguese economy gained ground in 2021, and growth strengthened further in 2022:Q1. Employment reached pre-pandemic levels in 2021:H2 and GDP in 2022:Q1. Nonetheless output is expected to remain below pre-pandemic trend over the medium term. While growth in 2022:Q1 was supported by a strong bounce back in tourism and domestic demand, the recovery for the rest of the year is expected to be hampered by the war in Ukraine despite limited direct linkages with Russia and Ukraine, due to higher commodity prices, supply-side disruptions, and weaker confidence and external demand. The outlook is clouded by uncertainty relating to the war, new virus waves, and the ultimate effect of the pandemic on corporate, bank, and public sector balance sheets. While declining and with improved composition, public debt would remain high.

Global Supply-Side Disruptions and Longer Delivery Times in the Euro Area

Global Supply-Side Disruptions and Longer Delivery Times in the Euro Area

Food systems during the COVID-19 pandemic: vulnerabilities, adaptations, and resilience

AbstractThis paper reviews the emerging literature on food systems and food supply chains during the COVID-19 pandemic. Four themes are explored: consumer demand and retail market effects; supply-side shocks; food system and supply chain resilience; and developing countries and food insecurity. The effect of demand-side shocks is explored, including the sudden shift in expenditures from food service to food retail. Longer-run structural changes in the food retailing landscape include the expansion of online food delivery. The effect of supply-side shocks is examined extensively in the literature, including short-run adaptations as supply chains pivoted from the food service sector to food retail, along with supply-side disruptions due to labour force outbreaks of COVID-19. Resilience is a common theme in the literature, at both food system and food supply chain levels. While a variety of perspectives are offered, most assessments point to a surprising degree of resilience and adaptability, while identifying the points of vulnerability. The pandemic increased food insecurity through the effect on household incomes from reduced labour mobility, lockdowns, and a contraction in economic activity. These effects were particularly prominent among vulnerable populations in developing countries. Significant attention has been paid to the short- and medium-run effects of the pandemic on food systems, with further research needed to understand any longer-term structural changes that may arise. The COVID-19 pandemic offers lessons for the robustness of food systems and the importance of timely, well-informed policy responses in preparation for future global shocks.

Influencing factors and critical path of inter-sector embodied heavy rare earth consumption in China

Heavy rare earth (HRE) has become a necessary metal material in the field of high-tech and new energy. China is rich in rare earth, but years of mining resulted in over-exploitation of HRE. And HRE's resource advantage position has been weakened gradually. Therefore, with the increasing demand for HRE, it is of great significance to understand the flow of HRE in sectors in China. In this article, the research model combines the input-output model and complex network model. From the perspective of sector supply chain, the network structure of embodied HRE flow network is analyzed, and the key sectors are identified. Subsequently, the impact of sectors' network roles on the consumption of embodied HRE is quantified based on panel regression model. Furthermore, structural path analysis is used to identify the critical path of the embodied HRE consumption. The main results are as follow: firstly, policy implication and supply-side disruption can cause fluctuation in embodied HRE consumption. But due to the rapid development of new energy industry, demand-side driving effect will be more and more prominent. Secondly, each sector plays a different role in the trading of embodied HRE. For example, metal mining and smelting processing is an important supply and consume sector and the consumption of HRE is largely affected by the sectors' network roles. Finally, the critical path of embodied HRE consumption shows that the main supply path is non-ferrous metal ore mining→ non-ferrous metal smelting and processing→ related electric machinery and metalworking machinery manufacturing/cultural, athletic and arts products manufacturing. However, with the development of new energy, the key supply chain may change. Therefore, we should pay attention to the role of the above key sectors and guide HRE to flow to key sectors of high-end applications. It is important to continuously improve the technology innovation of high-end application fields of HRE, promote resource utilization, and ensure the safety of key supply chains.

Working Remotely and the Supply-Side Impact of COVID-19

We analyze the supply-side disruptions associated with COVID-19. We find that sectors in which a higher fraction of the workforce is not able to work remotely experienced greater declines in employment and expected revenue growth, worse stock market performance, and higher likelihood of default. The stock market overweights low-exposure industries. Thus, our findings cast light on the disconnect between stock market indices and aggregate outcomes. We combine these ex ante heterogeneous industry exposures with daily financial market data to create a stock return portfolio that tracks news about the supply-side disruptions resulting from the pandemic. (JEL G12, D22, H25, J20, E00)Received June 1, 2021; editorial decision August 16 2021, by Editor Jeffrey Pontiff.

The aquaculture supply chain in the time of covid-19 pandemic: Vulnerability, resilience, solutions and priorities at the global scale

The COVID-19 global pandemic has had severe, unpredictable and synchronous impacts on all levels of perishable food supply chains (PFSC), across multiple sectors and spatial scales. Aquaculture plays a vital and rapidly expanding role in food security, in some cases overtaking wild caught fisheries in the production of high-quality animal protein in this PFSC. We performed a rapid global assessment to evaluate the effects of the COVID-19 pandemic and related emerging control measures on the aquaculture supply chain. Socio-economic effects of the pandemic were analysed by surveying the perceptions of stakeholders, who were asked to describe potential supply-side disruption, vulnerabilities and resilience patterns along the production pipeline with four main supply chain components: a) hatchery, b) production/processing, c) distribution/logistics and d) market. We also assessed different farming strategies, comparing land- vs. sea-based systems; extensive vs. intensive methods; and with and without integrated multi-trophic aquaculture, IMTA. In addition to evaluating levels and sources of economic distress, interviewees were asked to identify mitigation solutions adopted at local / internal (i.e., farm-site) scales, and to express their preference on national / external scale mitigation measures among a set of a priori options. Survey responses identified the potential causes of disruption, ripple effects, sources of food insecurity, and socio-economic conflicts. They also pointed to various levels of mitigation strategies. The collated evidence represents a first baseline useful to address future disaster-driven responses, to reinforce the resilience of the sector and to facilitate the design reconstruction plans and mitigation measures, such as financial aid strategies.

İstanbul’da Hazır Giyim İhracatına Yönelik Üretim Yapan İşletmelerin Covid-19 Pandemisi Nedeniyle Ortaya Çıkan Üretim ve Tedarik Sorunlarının İncelenmesi

The ready-to-wear sector, which is the most important and old industry branch for development in the world economy and still one of the important production and export branches of our country, has an important place in development since history. With the Covid-19 pandemic, which spread severely in the world between March and April 2020, broad layers of society were affected by health, and business life also reveals the consequences of the negative effects it has received in the medium and long term. The ready-made clothing sector, which is one of the labor-intensive sectors in our country, is also one of the affected production branches. In order to manage the risks arising from the restrictions of production branches that have a direct impact on the economy, a strategy that will be formed between the health of the employees and the demands of foreign buyer companies has arisen. The strategy to be developed in this direction is directly related to the ability of enterprises to adapt to new situations brought along by extraordinary conditions. All businesses, regardless of their size, faced serious difficulties, especially in this process. Low cost and quality, as well as standardizations, which are the two basic conditions of competing in the foreign market, are important in terms of coping with success and competition in international markets, especially due to the limited number of buyers, namely customers, and the infinite number of companies and products. Although the probability of occurrence is low, pandemics can reach millions of people depending on their impact and the rate of spread. Covid-19 has affected the flow of daily life, and demand-side distortions have also emerged with supply-side disruptions due to reasons such as employees' inability to go to work, disrupted and canceled raw material supply, and changes in consumer preferences. Production was quickly affected by the epidemic due to reduced working hours and job losses, and many manufacturers came to the point of bankruptcy. In the pandemic, the textile industry has reduced the production capacity of people due to the rapid decrease in demand by easily abandoning shopping and consumption, part-time production has been started or production has been stopped, but only a few have tried to go through this process by producing masks, overalls and bonnets. In this research, the difficulties faced by the enterprises that make production for ready-to-wear export in Istanbul and apply restrictions during the pandemic process will be examined. Difficulties encountered; production process, worker health, transportation and raw material supply. The data collection methods of the research, as well as the review of the relevant literature, will be analyzed by converting the data obtained from the twenty-question interviews and observations made with the company managers of 15 companies operating in Istanbul belonging to the sector, as a result of the descriptive analysis Nvivo program. Keywords: Ready-to-Wear, export, Istanbul, Covid 19, Production, Supply