Question A:
Firms’ incentives to reduce costs by sourcing inputs and products abroad have caused many American industries to become more vulnerable to supply chain disruptions.
Responses
Responses weighted by each expert's confidence
Question B:
Private firms have inadequate incentives to make investments to reduce the risk that disruptions in the supply of imports will cause shortages and raise domestic prices.
Responses
Responses weighted by each expert's confidence
Question C:
Global supply chain disruptions are the main driver of elevated US inflation over the past year.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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 Daron Acemoglu |
MIT | Bio/Vote History | ||
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Complex supply chains tend to create "risk externalities" domestically and globally, which are often uninternalized.
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 Joseph Altonji |
Yale | Bio/Vote History | ||
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 Alan Auerbach |
Berkeley | Bio/Vote History | ||
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 David Autor |
MIT | Bio/Vote History | ||
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 Katherine Baicker |
University of Chicago | Did Not Answer | Bio/Vote History | |
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 Abhijit Banerjee |
MIT | Bio/Vote History | ||
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There are many types of supply chain disruptions--here you have the international kind in mind I assume.
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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One caveat: supply chain disruptions can also occur within a country.
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 Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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 Judith Chevalier |
Yale | Bio/Vote History | ||
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Domestic supply chains can also be complex and delicate.
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 David Cutler |
Harvard | Bio/Vote History | ||
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 Angus Deaton |
Princeton | Bio/Vote History | ||
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True, but global pandemics didn't happen often, so hard to see how better incentives would have helped.
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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 Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Cost cutting through lower inventories of parts makes production less resilient. That could happen with domestic supply and bottlenecks too.
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Not just sourcing abroad, but also just-in-time inventory management, failure to build in redundancy etc.
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 Liran Einav |
Stanford | Bio/Vote History | ||
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 Ray Fair |
Yale | Bio/Vote History | ||
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 Amy Finkelstein |
MIT | Bio/Vote History | ||
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 Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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Depends on the shock. When the shock facing industries is domestic, international diversification via GSCs reduces vulnerability.
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 Austan Goolsbee |
Chicago | Bio/Vote History | ||
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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 Robert Hall |
Stanford | Did Not Answer | Bio/Vote History | |
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 Oliver Hart |
Harvard | Bio/Vote History | ||
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But it can happen with sourcing at home too.
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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 Caroline Hoxby |
Stanford | Bio/Vote History | ||
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 Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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But, those incentives have changed. Expect to see more diversified sourcing.
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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What's the counterfactual about how the domestic alternative is structured? is it geographically diversified? wildfire, hurricane risk, etc
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 Pete Klenow |
Stanford | Bio/Vote History | ||
 Jonathan Levin |
Stanford | Bio/Vote History | ||
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Certainly to global Covid disruptions. But domestic supply chains also can have vulnerabilities so a comparison is tricky.
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 Eric Maskin |
Harvard | Bio/Vote History | ||
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Outsourcing makes supply disruption possible---but the outsourcing need not be foreign to create vulnerability.
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 William Nordhaus |
Yale | Bio/Vote History | ||
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 Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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 Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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 Larry Samuelson |
Yale | Bio/Vote History | ||
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Firms trade off supply-chain cost and reliability. Sourcing abroad moves them along the frontier toward lower-cost/less-reliability.
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 José Scheinkman |
Columbia University | Bio/Vote History | ||
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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 Carl Shapiro |
Berkeley | Bio/Vote History | ||
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 Robert Shimer |
University of Chicago | Bio/Vote History | ||
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This does not imply that international sourcing is inefficient
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 James Stock |
Harvard | Bio/Vote History | ||
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Other cost-reducing measures, such as JIT inventory management, also contribute.
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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 Christopher Udry |
Northwestern | Bio/Vote History | ||
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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This also, theoretically, follows from the "risk externalities". Security investments in a network benefit other firms and consumers
-see background information here |
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Joseph Altonji |
Yale | Bio/Vote History | ||
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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No reason that private firms would fully internalize this public goods/national security concern.
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Katherine Baicker |
University of Chicago | Did Not Answer | Bio/Vote History | |
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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After all being the only one who can supply in a crisis has its attractions.
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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In might make sense to introduce stress tests for global value chains
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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Inadequate from what perspective? They won't hold excess capacity for national rather than private interests certainly.
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
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see above.
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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I’m no expert on this, but I don’t see the market failure. That’s a cost benefit trade-off.
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Though I'd put it somewhat differently. Financial-market pressures, gov policy etc. create incentives to under-insure.
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Bio/Vote History | ||
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Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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Again, broad international diversification is the best way to reduce this risk, and firms have invested heavily in this.
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Austan Goolsbee |
Chicago | Bio/Vote History | ||
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Robert Hall |
Stanford | Did Not Answer | Bio/Vote History | |
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Oliver Hart |
Harvard | Bio/Vote History | ||
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It is not easy for private agents to reduce the risk of a supply disruption caused by an aggregate shock, such as a pandemic
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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The major problem was that everyone was overconfident, and no one thinks about low probability events.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Expect to see companies make investments and adjustments that reduce the likelihood of this going forward.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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Must depend on the size of the firm, surely walmart worries about this.
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Bio/Vote History | ||
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There is an externality---a firm that protects itself against disruption also protects the firms it supplies; see Elliott and Golub (2020)
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William Nordhaus |
Yale | Bio/Vote History | ||
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Yes, externalities, but most of impacts are on (short-sighted) firms.
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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If a firm's supply is disrupted, that generates disruptions all further down the supply chain that the firm doesn't necessarily internalize.
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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Firms do not internalize the externalities their disruptions impose on others. It is less clear how significant these externalities are.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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There may be an externality here, but I've seen no evidence that it's important.
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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James Stock |
Harvard | Bio/Vote History | ||
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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There is an externality; free-riding seems likely.
-see background information here |
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Question C Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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Supply chain disruptions are a contributing factor, but probably not the "main" factor.
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Joseph Altonji |
Yale | Bio/Vote History | ||
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Main? Panemic related shifts in demand from services to consumer goods and lower labor supply are also important.
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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It's one of the drivers. Two others: demand surge due to pandemic aid transfer programs + consumption shift from services to goods
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Katherine Baicker |
University of Chicago | Did Not Answer | Bio/Vote History | |
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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it is one driver among several others, not "the" driver.
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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Hard to definitively disentangle the impact of supply and demand shocks.
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
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Not sure what "main" means. I think they were main at the beginning.
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Supply and demand are both factors. Who is to say which is greater
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Perhaps "a main" rather than "the main." Demand pressure and changes in the composition of demand also important.
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Bio/Vote History | ||
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Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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High demand, DOMESTIC supply chain disruptions, and labor shortages are more important.
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Austan Goolsbee |
Chicago | Bio/Vote History | ||
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Robert Hall |
Stanford | Did Not Answer | Bio/Vote History | |
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Oliver Hart |
Harvard | Bio/Vote History | ||
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They are one driver but there are others: fiscal stimulus and the great resignation
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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A driver but not the main driver.
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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Inflation differentials tell us supply problems are important. M growth is important but "long and variable lags" make its impact unclear.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Supply plays a role. But, so does huge increase in demand from government stimulus as well as increased energy regulation.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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Look at rent and wages, this has mattered but so has fiscal support and monetary policy
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Import prices have only contributed about 1.4 percentage points of inflation per year since April 2020.
-see background information here |
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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I would have said "a" main driver"- surely government spending also has contributed to current demand - supply imbalances.
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Eric Maskin |
Harvard | Bio/Vote History | ||
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Disruption is certainly one inflation driver, but there are others (e.g., the great resignation), and I don't know which is most important.
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William Nordhaus |
Yale | Bio/Vote History | ||
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A driver, but many components are largely independent (energy, used cars, food).
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Clearly important but unclear if they are literally > or < 50% responsible. If you forced me, I would guess somewhat > 50%.
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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Supply-chain disruptions increase cost, but there are other important forces behind inflation.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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However, fiscal policy and shifts in labor supply probably also important contributors.
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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Supply chain disruptions should move relative prices, not the price level
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James Stock |
Harvard | Bio/Vote History | ||
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An important contributing factor, not "main driver"; also labor mkt tightness and high domestic demand, both pandemic-induced.
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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