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Business cycle stylized facts and inventory behaviour: New evidence for the Euro area

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  • Cesaroni, Tatiana
  • Maccini, Louis
  • Malgarini, Marco

Abstract

The purpose of this paper is for the first time to use Business Tendency Survey data, first, to identify new facts that are useful for the interpretation of the decline in the volatility of real activity in the Euro area, and, second, to test the inventory management hypothesis as an explanation for the Great Moderation in Europe. We present stylized facts from the Business Tendency data on series for inventories, current production, current orders, and expected production for the Euro area, emphasizing the decline in the volatility of the series. Further, we investigate whether the decline in inventory volatility can be attributed to an endogenous change in the persistence of shocks to the accumulation dynamics of inventories or to an exogenous change in the shocks hitting the inventory optimisation process. Our results at Euro level generally indicate that there is no evidence of a break in the inventory accumulation process. On the contrary, the impact of exogenous shocks on inventory volatility appears to be steadily declining over time, beginning from the mid-1980s.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Production Economics.

Volume (Year): 133 (2011)
Issue (Month): 1 (September)
Pages: 12-24

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Handle: RePEc:eee:proeco:v:133:y:2011:i:1:p:12-24

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Web page: http://www.elsevier.com/locate/ijpe

Related research

Keywords: Business cycle stylized facts Inventory behaviour European Business Tendency Survey data;

References

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  1. Marco Malgarini, 2007. "Inventories and business cycle volatility: an analysis based on ISAE survey data," ISAE Working Papers 84, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
  2. Domenico Giannone & Michele Lenza & Lucrezia Reichlin, 2008. "Explaining The Great Moderation: It Is Not The Shocks," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 621-633, 04-05.
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Cited by:
  1. Malgarini, Marco, 2012. "Industrial production and Confidence after the crisis: what's going on?," MPRA Paper 53813, University Library of Munich, Germany.

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