Microeconomic Inventory Behavior and Aggregate Inventory Dynamics
AbstractThe slow adjustment of inventory stocks to changes in sales has been a puzzle for the inventory literature since at least Auerbach and Feldstein (1976). Recent evidence suggests that estimated firm-level adjustment speeds of inventory stocks are significantly higher than estimates based on aggregate data. This paper investigates the circumstances under which such bias occurs using an industry equilibrium model where, consistently with empirical evidence, some firms smooth production while others bunch it. The model can account for the significant downward bias documented empirically when a subset of firms displays countercyclical mark-up movements.
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Bibliographic InfoPaper provided by Carnegie Mellon University, Tepper School of Business in its series GSIA Working Papers with number 2003-E28.
Date of creation: Oct 2003
Date of revision:
Contact details of provider:
Postal: Tepper School of Business, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213-3890
Web page: http://www.tepper.cmu.edu/
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-12-12 (All new papers)
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- Aubhik Khan & Julia K. Thomas, 2002.
"Inventories and the business cycle: an equilibrium analysis of (S,s) policies,"
02-20, Federal Reserve Bank of Philadelphia.
- Aubhik Khan & Julia K. Thomas, 2004. "Inventories and the business cycle: an equilibrium analysis of (S,s) policies," Working Papers 04-11, Federal Reserve Bank of Philadelphia.
- Aubhik Khan & Julie K. Thomas, 2003. "Inventories and the business cycle: an equilibrium analysis of (S,s) policies," Staff Report 329, Federal Reserve Bank of Minneapolis.
- Aubhik Khan & Julia Thomas, 2003. "Inventories and the Business Cycle: An Equilibrium Analysis of (S,s) Policies," NBER Working Papers 10078, National Bureau of Economic Research, Inc.
- Aubhik Khan & Julia K. Thomas, 2004.
"Modeling inventories over the business cycle,"
343, Federal Reserve Bank of Minneapolis.
- Aubhik Khan & Julia K. Thomas, 2004. "Modeling inventories over the business cycle," Working Papers 04-13, Federal Reserve Bank of Philadelphia.
- Julia K. Thomas & Aubhik Khan, 2005. "Modeling Inventories Over the Business Cycle," 2005 Meeting Papers 182, Society for Economic Dynamics.
- Aubhik Khan & Julia K. Thomas, 2004. "Modeling Inventories Over the Business Cycle," NBER Working Papers 10652, National Bureau of Economic Research, Inc.
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