Supply shock

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Supply shock

An event that influences production capacity and costs in an economy.

Supply Shock

Any sudden event that dramatically but (usually) temporarily increases or decreases supply for one or more goods or services. The event may result from government intervention, such as a change in money supply, or may be a random occurrence in the market. For example, a sudden discovery of oil in a field previously thought mainly dry will increase the supply of oil, which will lower the price, assuming demand remains constant. See also: Demand shock.
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Notice that only the supply shock affects the level of output at horizons longer than 24 quarters, and only the money demand and supply shocks affect real balances in the long-run.
The general perception about the causes of the recent surge in inflation points to many other factors such as increase in indirect taxes (sales and excise), excess money supply, currency depreciation, supply shocks like virus-induced reduction in cotton output and weather-induced lower wheat crop, higher agricultural support prices, increases in the prices of utilities, production losses due to power and infrastructural bottlenecks, increases in wages and salaries, as well as inflationary expectations.
The low water levels, along with the outage of Switzerland's only oil refinery, forced the country to tap its strategic reserves typically intended for times of war or global supply shocks.
EU Commission Vice President for Energy Union Maros Sefcovic said, "The improvement of infrastructure through realistic and feasible projects is crucial to diversify energy resources and strengthen the region's resilience to supply shocks.
For insurers, food system disruption could present a substantial opportunity to develop innovative risk transfer products that would enhance global resilience to potential systemic food supply shocks.
These labour supply shocks have contained wage growth in the face of robust employment growth.
Further conflict in the region may create supply shocks for crude.
Upside risks on the inflation outlook from domestic supply shocks are largely mitigated by contained imported inflation, against the background of lower oil prices and the consequent downward revision in international food price forecasts.
The large movements in oil prices in 1973, 1979, 1986, and 1990 were all in response to supply shocks.
Does it arise primarily from technological or weather-related supply shocks, or from changes in demand like those induced by the growing use of biofuels?
Supply shocks like these complicate the government's task of battling weak growth and inflation.
The oil market has weakened over the last month but remains nervous about further supply shocks.