Working Paper: NBER ID: w29209
Authors: Alberto Cavallo; Oleksiy Kryvtsov
Abstract: We use a detailed micro dataset on product availability to construct a direct high-frequency measure of consumer product shortages during the 2020–2021 pandemic. We document a widespread multi-fold rise in shortages in nearly all sectors early in the pandemic. Over time, the composition of shortages evolved from many temporary stockouts to mostly discontinued products, concentrated in fewer sectors. We show that unexpected product shortages have significant inflationary effects within three months. We develop a model of inventories in a sector facing both demand and cost disturbances, and use the observed joint dynamics of stockouts and prices to show that these effects can be associated with elevated cost of replenishing inventories.
Keywords: stockouts; inflation; microdata; consumer products; COVID-19
JEL Codes: D22; E31; E37
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unexpected product shortages (L15) | inflationary pressures (E31) |
| doubling of the stockout rate (C69) | increase in inflation (E31) |
| stockouts (L81) | costs of replenishing inventories (D25) |
| cost shocks (D24) | inflationary effects (E31) |
| stockouts (L81) | price changes (P22) |