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Uncertainty in Sales and Inventory Behaviour in the U.S. Trade Sectors

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  • Tae-Hwy Lee
  • Faik Koray

Abstract

This paper investigates uncertainty in sales and inventory behavior for the U.S. wholesale and retail trade sectors. First, using a vector error correction model with GARCH-M, the authors find that the uncertainty measured by forecast error variance in sales does not affect inventory behavior in both trade sectors. Second, using forecast error variance decomposition and estimated permanent components, they observe that the uncertainty may be attributed more to demand shocks than to cost shocks.

Suggested Citation

  • Tae-Hwy Lee & Faik Koray, 1994. "Uncertainty in Sales and Inventory Behaviour in the U.S. Trade Sectors," Canadian Journal of Economics, Canadian Economics Association, vol. 27(1), pages 129-142, February.
    • Handle: RePEc:cje:issued:v:27:y:1994:i:1:p:129-42
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    Cited by:

    1. Simona Mateut, 2011. "Reverse trade credit - the use of prepayments by French firms," Discussion Papers 11/12, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    2. Mustafa Caglayan & Sara Maioli & Simona Mateut, 2011. "Inventories and sales uncertainty," Discussion Papers 11/02, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    3. Caglayan, Mustafa & Maioli, Sara & Mateut, Simona, 2012. "Inventories, sales uncertainty, and financial strength," Journal of Banking & Finance, Elsevier, vol. 36(9), pages 2512-2521.
    4. Barry Scholnick, 1999. "Interest Rate Asymmetries in Long-Term Loan and Deposit Markets," Journal of Financial Services Research, Springer;Western Finance Association, vol. 16(1), pages 5-26, September.

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