Research

Many firms operate with a backlog of unfilled orders, generating a \emph{time to fill} between new orders and sales. Using novel administrative manufacturing microdata for Germany, we show that backlog is widespread and implies an average time to fill of half a year. Backlog renders sales prices predetermined by past prices of new orders, invalidating a class of conventional strategies for identifying 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, falls after expansionary supply shocks, thereby dampening the price response to both shocks.

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.

Work in progress.