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DESCRIPTION:The Moynihan Institute’s program for Trade\, Development and Po
 litical Economy welcomes Maria-Jose Carreras-Vall\, assistant professor of
  economics at Penn State University. Carreras-Valle will discuss her joint
  paper “The Costs of Delivery Delays\,” which is co-authored by Alessandro
  Ferrari from the University of Zurich.Since 2018\, there has been a consi
 stent decline in the distance traveled by U.S. manufacturing imports\, rea
 ching a level not observed since 2008. This trend is the result of the sub
 stitution away from imports from China and towards imports from closer cou
 ntries. At the same time\, U.S. manufacturing inventory-to-sales ratio has
  continued to rise. These trends are at odds with the literature which fin
 ds that reductions in the distance of imports are associated with a declin
 e in inventories. We argue that a rise in delivery time risk\, driven by l
 onger and more frequent delays and supply disruptions\, can reconcile thes
 e trends. We do so in the context of a model of global sourcing with stoch
 astic delivery times and inventories. Firms trade off the lower price of f
 arther inputs with the increase in exposure to demand risk and a higher ri
 sk of delays. In response\, firms increase their inventories. Yet\, as del
 ivery time risk rises\, firms substitute away from farther inputs and near
 -shore. While the composition effect decreases incentives to hold inventor
 ies\, the rise in delivery risk pushes firms to increase their total inven
 tory stock. We calibrate the model to quantify the costs of the increase i
 n delivery delays in terms of output\, prices\, and firms' sourcing choice
 s in the post-Covid time.Maria-Jose Carreras-Valle is an assistant profess
 or of economics at Penn State University. She completed a Ph.D. at the Uni
 versity of Minnesota in 2022. Her research focuses on international econom
 ics and trade\, with a specific interest in understanding how uncertainty 
 impacts trade dynamics. Through her work\, Maria-Jose seeks to shed light 
 on complex issues in global markets\, contributing valuable insights to th
 e field of economics.
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SUMMARY:Maria-Jose Carreras-Valle: The Costs of Delivery Delays
UID:RFCALITEM639121224763252290
X-ALT-DESC;FMTTYPE=text/html:<p>The Moynihan Institute’s program for Trade\
 , Development and Political Economy welcomes Maria-Jose Carreras-Vall\, as
 sistant professor of economics at Penn State University. Carreras-Valle wi
 ll discuss her joint paper “The Costs of Delivery Delays\,” which is co-au
 thored by Alessandro Ferrari from the University of Zurich.</p><p><span st
 yle="background-color: rgba(0\, 0\, 0\, 0)\; color: inherit\; font-family:
  inherit\; font-size: inherit\; text-align: inherit\; text-transform: inhe
 rit\; word-spacing: normal\; caret-color: auto\; white-space: inherit">Sin
 ce 2018\, there has been a consistent decline in the distance traveled by 
 U.S. manufacturing imports\, reaching a level not observed since 2008. Thi
 s trend is the result of the substitution away from imports from China and
  towards imports from closer countries. At the same time\, U.S. manufactur
 ing inventory-to-sales ratio has continued to rise. These trends are at od
 ds with the literature which finds that reductions in the distance of impo
 rts are associated with a decline in inventories. </span></p><p><span styl
 e="background-color: rgba(0\, 0\, 0\, 0)\; color: inherit\; font-family: i
 nherit\; font-size: inherit\; text-align: inherit\; text-transform: inheri
 t\; word-spacing: normal\; caret-color: auto\; white-space: inherit">We ar
 gue that a rise in delivery time risk\, driven by longer and more frequent
  delays and supply disruptions\, can reconcile these trends. We do so in t
 he context of a model of global sourcing with stochastic delivery times an
 d inventories. Firms trade off the lower price of farther inputs with the 
 increase in exposure to demand risk and a higher risk of delays. In respon
 se\, firms increase their inventories. Yet\, as delivery time risk rises\,
  firms substitute away from farther inputs and near-shore. </span></p><p><
 span style="background-color: rgba(0\, 0\, 0\, 0)\; color: inherit\; font-
 family: inherit\; font-size: inherit\; text-align: inherit\; text-transfor
 m: inherit\; word-spacing: normal\; caret-color: auto\; white-space: inher
 it">While the composition effect decreases incentives to hold inventories\
 , the rise in delivery risk pushes firms to increase their total inventory
  stock. We calibrate the model to quantify the costs of the increase in de
 livery delays in terms of output\, prices\, and firms' sourcing choices in
  the post-Covid time.</span></p><p><span style="background-color: rgba(0\,
  0\, 0\, 0)\; color: inherit\; font-family: inherit\; font-size: inherit\;
  text-align: inherit\; text-transform: inherit\; word-spacing: normal\; ca
 ret-color: auto\; white-space: inherit">Maria-Jose Carreras-Valle is an as
 sistant professor of economics at Penn State University. She completed a P
 h.D. at the University of Minnesota in 2022. Her research focuses on inter
 national economics and trade\, with a specific interest in understanding h
 ow uncertainty impacts trade dynamics. Through her work\, Maria-Jose seeks
  to shed light on complex issues in global markets\, contributing valuable
  insights to the field of economics.</span></p>
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