Research

Work in progress.

Many firms receive orders months before they deliver the corresponding output, creating a backlog of unfilled orders. Using German administrative manufacturing microdata, we document widespread backlog and an average time to fill, from order to sale, of six months. Backlog renders sales prices predetermined by past order agreements, challenging conventional sales-based identification of firm demand. We construct theoretically coherent order-book prices and use them to identify firm-level demand and supply shocks. We show, empirically and theoretically, that backlog shapes the transmission of such shocks: it rises after expansionary demand shocks and falls after expansionary supply shocks, thereby dampening the new order price response to both shocks on impact.

Perceptions about future monetary policy depend on expectations of policy-relevant variables and beliefs about the policy rule itself. Empirically, both violate full-information rational expectations: expectations of key variables deviate from FIRE, and perceived policy rules diverge from actual ones. These deviations generate endogenous monetary surprises, which we decompose into two channels: belief misperceptions, arising from incorrect expectations about policy-relevant variables, and rule misperceptions, arising from incorrect beliefs about the policy rule itself. We develop a model that generates these endogenous surprises and show that it closely matches their empirical counterparts. The model reveals that perceptions about how strongly the central bank reacts to policy-relevant variables govern the sign of inflation's response to a monetary policy shock — weak perceived reactions generate a positive response, resolving the price puzzle. Further, the model resolves the forward guidance puzzle.

Transportation restrictions on waterways due to high or low water level events lead to disruptions of supply chains, which are exogenous to the current state of the economy. This paper proposes a novel method to exploit and quantify these surprising transportation restrictions which lead to regional supply chain disruptions and applies the method to the river Rhine. A surprising decrease of the Rhine’s shipping capacity leads to a short-lived but significant decrease in economic activity, not only in the bordering federal states but entire Germany. This effect is more pronounced in industries and regions that rely more heavily on the Rhine and the goods shipped on it. One channel through which these disruptions propagate are changes in energy prices. We find that energy marketplaces that are dependent on Rhine transportation show a price increase while others do no react. Also, we document a substitution towards suppliers that do not rely on the Rhine to deliver their goods.