This paper analyses the determinants of the inventory to assets ratio in panel data sets of Japanese and UK firms in the period 1960–85. The analytical framework sets inventory decisions in the context of decisions by the firm about other assets and liabilities, in contrast to traditional models of inventories. Investment in inventories in Japan is found to be particularly related to sector-specific inflation rates and expected sales, negatively related to expected profits, and not much affected by interest rates. By contrast, UK inventories are generally positively related to profit rates, and respond to short-term interest rates. Once other variables are taken into account, the coefficient on a time trend is positive for Japan (negative for the United Kingdom), which casts some doubt on the widely held view of Japanese innovation in inventory holding.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Publisher Info
Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
1545.