The Inflexible Structure of Global Supply Chains
IMF Working Papers, September 13, 2019
Source details
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- The Inflexible Structure of Global Supply Chains
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Bibliographic details
- Authors: Tamim Bayoumi, Jelle Barkema
- Published: September 13, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513510569.001
Key findings
- The production structure is highly inflexible in the short run.
- Rigidity in global supply chains has, if anything, risen over time as supply chains have deepened.
- While estimated elasticities rise in the long run, supply chains remain somewhat inflexible.
- The main results are robust to alternative price measures, including measures that account for the U.S. dollar’s outsized role in trade through invoicing.
- Implications span cross-country business-cycle dynamics, propagation of sectoral shocks, and measurement of international competitiveness.
Methodology
- A parsimonious, generalized specification is proposed to test the degree of global-supply-chain flexibility.
- The analysis focuses on how easily global value chains can re-configure in response to changes in prices.
Robustness checks and alternative measures
- Results are tested using alternative price measures.
- Specific robustness includes price measures that account for the U.S. dollar’s outsized role in trade through invoicing.
Subject areas and keywords
- Subject: Exchange rates, Exports, Foreign exchange, Global value chains, Globalization, Imports, International trade, Real effective exchange rates
- Keywords: countries trade, error-correction term, Exchange rates, export deflator, export openness, Exports, final-goods export, Global, Global value chains, goods price, Imports, interaction term, price change, Real effective exchange rates, trade invoicing, trade openness, WP
Content in this bundle
- Working Paper