Inventories and the Business Cycle: Testing a Sequential Trading Model
AbstractThe uncertain and sequential trading (UST) model of inventories behavior with iid shocks predicts that (a) the beginning of period inventories is a sufficient statistic for past variables and (b) an increase in the beginning of period inventories reduces output, employment, hours per employee, and effort. I find empirical support for the second hypothesis but not for the first. The rejection of the first hypothesis is rather informative and points in the direction of adjustment costs and/or serially correlated shocks. (Copyright: Elsevier)
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Volume (Year): 4 (2001)
Issue (Month): 3 (July)
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Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
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