Inventories, Factor Demand and Capacity Utilization : the Long and Short Run Structure
AbstractAn ECM is derived from first order conditions of a factor demand model. Decisions on inventory stock and capacity utilization are (endogenously) modelled, by which a large systems of equations results. Within this system the exogeneity of real factor prices as well as sales in tested. The role of inventory stock in the long run, i.e. as a precautionary measure (according to Holt, Modigliani, Muth and Simon (1960) and/or as a production factor (Kydland and Prescott (1982), Christiano (1988) are further investigated by impulse response functions. For French industrial sectors (1970.I-1992.IV) inventory stocks turn out to be both a decision variable as well as a residual. The precautionary measure is not rejected, but a linear-quadratic specification seems not to hold. Further, no strong evidence is found for the inventory stock as a production factor.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1995007.
Date of creation: 01 Feb 1995
Date of revision:
Find related papers by JEL classification:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anne DAVISTER-LOGIST).
If references are entirely missing, you can add them using this form.