The Sources of Fluctuations in Aggregate Inventories and GNP
AbstractA simple real linear-quadratic inventory model is used to determine how cost and demand shocks interacted to cause fluctuations in aggregate GNP and inventories in the U.S., 1947-1986. Cost shocks appear to be the predominant source of fluctuations in inventories, and are largely responsible for the well known fact that GNP is more variable than final sales. Cost and demand shocks are of roughly equal importance for GNP. These estimates are, however, imprecise. With a different, but plausible, value for a certain target inventory-sales ratio, cost shocks are less important than demand shocks for GNP fluctuations.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2992.
Date of creation: Jun 1989
Date of revision:
Publication status: published as The Quarterly Journal of Economics, Vol. CV, No. 423, pp. 939-971, (November 1990).
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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- West, Kenneth D, 1990. "The Sources of Fluctuations in Aggregate Inventories and GNP," The Quarterly Journal of Economics, MIT Press, vol. 105(4), pages 939-71, November.
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