Production Smoothing, Firms' Heterogeneity, and Financial Constraints: Evidence from a Panel of UK Firms
AbstractIn this paper, the authors provide an empirical analysis of heterogeneity in firms' inventory behavior using a panel of U.K. manufacturing firms. They first investigate how the relative variance of production and sales differs across firms. The authors then use variants of the linear quadratic inventory model in order to analyze potential heterogeneity in firms' incentives to smooth production. The results suggest that incentives to smooth production are not prevalent. This conclusion also holds when firms are partitioned according to whether they are more or less likely to face financial constraints. Copyright 1998 by Royal Economic Society.
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Bibliographic InfoPaper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number 449.
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Postal: Discussion Papers Administrator, Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, U.K.
Other versions of this item:
- Guariglia, Alessandra & Schiantarelli, Fabio, 1998. "Production Smoothing, Firms' Heterogeneity, and Financial Constraints: Evidence from a Panel of UK Firms," Oxford Economic Papers, Oxford University Press, vol. 50(1), pages 63-78, January.
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- Andrew Benito, 2002. "Financial pressure, monetary policy effects and inventory adjustment by UK and Spanish firms," Banco de Espaï¿½a Working Papers 0226, Banco de Espa�a.
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