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Supply Chain Disruptions and Inventory Dynamics
In the aftermath of the COVID-19 pandemic, global economic activity was severely impacted by supply chain disruptions. Producers of intermediate inputs could not keep up with demand for their goods, either because of the direct impact of COVID-19 or because of the sluggish adjustment of supply. As a result, the operations of firms that relied on such intermediate inputs were significantly affected. For instance, shortages of semiconductors, a critical input in the production of automobiles, led to an unprecedented persistent decline of car production in the U.S. and other countries. Firms often rely on holding ... (full story)