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The Determinants of Manufacturing Inventories in the UK

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  • Cuthbertson, Keith
  • Gasparro, David
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    Abstract

    The authors examine the determinants of inventory holding by the U.K. manufacturing sector over the period 1968-89. They find that inventory levels respond positively to output and its conditional variance and negatively to the level of gearing. Tehnological innovation in the form of computerized inventory control leads to a fall in the stock-output ratio. Epirical results for inventories are examined in a cointegration and a general-to-specific error correction model with conditional variances estimated using an ARCH framework. A backward-looking error correction model is found to outperform a forward-looking model, although the latter also provides a reasonable 'fit'to the data. Copyright 1993 by Royal Economic Society.

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    Bibliographic Info

    Article provided by Royal Economic Society in its journal The Economic Journal.

    Volume (Year): 103 (1993)
    Issue (Month): 421 (November)
    Pages: 1479-92

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    Handle: RePEc:ecj:econjl:v:103:y:1993:i:421:p:1479-92

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    Cited by:
    1. Sharon Kozicki & P.A. Tinsley, 1998. "Vector rational error correction," Research Working Paper 98-03, Federal Reserve Bank of Kansas City.
    2. Marcel Fafchamps Jan Willem Gunning & Remco Oostendorp, . "Inventories, Liquidity, and Contractual Risk in African Manufacturing," Working Papers 97020, Stanford University, Department of Economics.
    3. Blazenko, George W. & Vandezande, Kirk, 2003. "Corporate holding of finished goods inventories," Journal of Economics and Business, Elsevier, vol. 55(3), pages 255-266.
    4. Obermaier, Robert, 2012. "German inventory to sales ratios 1971–2005—An empirical analysis of business practice," International Journal of Production Economics, Elsevier, vol. 135(2), pages 964-976.
    5. Corbett, Jenny & Hay, Donald & Louri, Helen, 1999. "A financial portfolio approach to inventory behaviour: Japan and the UK," International Journal of Production Economics, Elsevier, vol. 59(1-3), pages 43-52, March.
    6. Louri, Helen, 1996. "Inventory investment in Greek manufacturing industry: Effects from participation in the European market," International Journal of Production Economics, Elsevier, vol. 45(1-3), pages 47-54, August.
    7. Albertson, Kevin & Aylen, Jonathan, 2003. "Forecasting the behaviour of manufacturing inventory," International Journal of Forecasting, Elsevier, vol. 19(2), pages 299-311.
    8. Barrera, Carlos R., 2011. "Impacto amplificador del ajuste de inventarios ante choques de demanda según especificaciones flexibles," Working Papers 2011-009, Banco Central de Reserva del Perú.
    9. Guasch, J. Luis & Kogan, Joseph, 2001. "Inventories in developing countries : levels and determinants - a red flag for competitiveness and growth," Policy Research Working Paper Series 2552, The World Bank.
    10. Yue Fang & John Zhang, 1999. "Performance of control charts for autoregressive conditional heteroscedastic processes," Journal of Applied Statistics, Taylor & Francis Journals, vol. 26(6), pages 701-714.
    11. Li, Han & Li, Zhigang, 2013. "Road investments and inventory reduction: Firm level evidence from China," Journal of Urban Economics, Elsevier, vol. 76(C), pages 43-52.
    12. Guasch, J. Luis & Kogan, Joseph, 2003. "Just-in-case inventories - a cross-country analysis," Policy Research Working Paper Series 3012, The World Bank.
    13. Marianne Sensier, 2003. "Inventories and asymmetric business cycle fluctuations in the UK: a structural approach," Applied Economics, Taylor & Francis Journals, vol. 35(4), pages 387-402.

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