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Market Perceptions and Inventory-Price-Employment Plans

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  • Carlson, John A
  • Dunkelberg, William C

Abstract

Ordered-probit analyses of National Federation of Independent Business survey data show that individual firms generally conform to the stock adjustment model of inventory investment, with the predicted response more likely when inventories are perceived as excessive than when deficient. Contrary to inferences about slow adjustment speeds from aggregate data, inventory adjustments by individual firms do not tend to take more than three months to complete. There is no evidence that price is used to achieve desired inventory targets, but prices are sticky in that changes set in motion one quarter tend to continue into the next quarter. Copyright 1989 by MIT Press.

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  • Carlson, John A & Dunkelberg, William C, 1989. "Market Perceptions and Inventory-Price-Employment Plans," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 318-324, May.
    • Handle: RePEc:tpr:restat:v:71:y:1989:i:2:p:318-24
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    Cited by:

    1. Daniele Coen-Pirani, 2004. "Markups, Aggregation, and Inventory Adjustment," American Economic Review, American Economic Association, vol. 94(5), pages 1328-1353, December.

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