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The cyclical behaviour of inventories: European cross-country evidence from the early 1990s recession

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  • Fabio Bagliano
  • Alessandro Sembenelli

Abstract

This paper employs data for a panel of firms from France, Italy and the UK to study the effect of the recession of the early 1990s on inventory investment, controlling for cyclical fluctuations at the firm level. The results clearly show some common patterns across countries, pointing to the relevance of financial factors (namely, the level of leverage) in propagating initial recessionary shocks. Moreover, Italian firms, especially if 'small and young', seem more likely to suffer from a reduction in the value of collateralizable assets possibly originated by restrictive policy actions.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 36 (2004)
Issue (Month): 18 ()
Pages: 2031-2044

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Handle: RePEc:taf:applec:v:36:y:2004:i:18:p:2031-2044

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References

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  17. Steven M. Fazzari & R. Glenn Hubbard & BRUCE C. PETERSEN, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
  18. Robert E. Carpenter & Steven M. Fazzari & Bruce C. Petersen, 1994. "Inventory (Dis)Investment, Internal Finance Fluctuations, and the Business Cycle," Macroeconomics 9401001, EconWPA.
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Citations

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Cited by:
  1. Abrahamsen, Yngve & Hartwig, Jochen, 2011. "Inventory investment and production in Europe during the "Great Recession": Is there a pattern?," International Journal of Production Economics, Elsevier, vol. 132(2), pages 174-177, August.
  2. Sangalli, Ilaria, 2013. "Inventory investment and financial constraints in the Italian manufacturing industry: A panel data GMM approach," Research in Economics, Elsevier, vol. 67(2), pages 157-178.
  3. Guido De Blasio, 2004. "Does trade credit substitute for bank credit?," Temi di discussione (Economic working papers) 498, Bank of Italy, Economic Research and International Relations Area.
  4. Gaiotti, Eugenio & Generale, Andrea, 2001. "Does monetary policy have asymmetric effects? A look at the investment decisions of Italian firms," Working Paper Series 0110, European Central Bank.
  5. Guariglia, Alessandra & Mateut, Simona, 2010. "Inventory investment, global engagement, and financial constraints in the UK: Evidence from micro data," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 239-250, March.

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