This paper provides evidence that global supply chain shocks are key drivers of business cycle fluctuations, introducing a novel identification strategy based on a narrative analysis of price surcharges from the three largest container shipping companies. Negative shocks cause a persistent rise in consumer prices and a prolonged decline in economic activity. Sectoral impacts vary with exposure to global supply chains, measured by the share of inputs sourced from abroad. Spillovers extend to non-tradable sectors. These shocks accounted for up to 45% of the post-pandemic inflation. Without monetary or fiscal stimulus, recovery would have taken 18 months longer.

This study investigates the business cycle dynamics of the U.S. economy since 1900 through a multivariate framework that imposes minimal economic restrictions. A key finding is the presence of a significant negative correlation between inflation and economic slack, at business cycle frequencies. This relationship remains robust across over a century of data, with stable coefficients in subsample periods.

This paper proposes a model for now-casting inflation for a selection of advanced economies and emerging markets which exploits weekly energy prices and, where available, other high-frequency indicators.