A New Supply Bottlenecks Index Based on Newspaper Data

We develop a new monthly indicator of supply bottlenecks using newspaper articles. The supply bottlenecks index (SBI) provides a consistent narrative of supply issues related to wars, natural disasters, strikes and, most recently, the COVID-19 pandemic. Innovations in the SBI have important macroeconomic implications: an increase in the SBI functions as a cost-push shock, decreasing industrial production and employment, and pushing prices up, so that monetary policy faces important trade-offs