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Inventory investment and production in Europe during the "Great Recession": Is there a pattern?

  • Abrahamsen, Yngve
  • Hartwig, Jochen

The paper examines the nexus between inventory investment and the change in aggregate production during the "Great Recession" of 2008/09 for 29 European countries. A fairly uniform pattern emerges. Inventory investment is positively correlated with changes in production and follows the latter with a time-lag of two to three quarters. Very few countries (Austria, Greece, Spain and Switzerland) diverge from the typical pattern. This might hint to problems with respect to data quality.

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Article provided by Elsevier in its journal International Journal of Production Economics.

Volume (Year): 132 (2011)
Issue (Month): 2 (August)
Pages: 174-177

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Handle: RePEc:eee:proeco:v:132:y:2011:i:2:p:174-177
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  1. Chikan, Attila & Kovacs, Erzsebet & Tatrai, Tunde, 2005. "Macroeconomic characteristics and inventory investment: a multi-country study," International Journal of Production Economics, Elsevier, vol. 93(1), pages 61-73, January.
  2. Wilkinson, Maurice, 1989. "Aggregate inventory behavior in large European economies," European Economic Review, Elsevier, vol. 33(1), pages 181-194, January.
  3. Yngve Abrahamsen & Jochen Hartwig, 2011. "Inventory investment and production in Europe: Is there a pattern?," KOF Working papers 11-271, KOF Swiss Economic Institute, ETH Zurich.
  4. Robert E. Carpenter & Steven M. Fazzari & Bruce C. Petersen, 1998. "Financing Constraints And Inventory Investment: A Comparative Study With High-Frequency Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 513-519, November.
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  7. Jochen Hartwig, 2008. "Trying to assess the quality of macroeconomic data: The case of Swiss labour productivity growth as an example," OECD Journal: Journal of Business Cycle Measurement and Analysis, OECD Publishing,Centre for International Research on Economic Tendency Surveys, vol. 2008(1), pages 37-61.
  8. Andreas Hornstein, 1998. "Inventory investment and the business cycle," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 49-71.
  9. Chikan, Attila & Tatrai, Tunde, 2003. "Developments in global inventory investment," International Journal of Production Economics, Elsevier, vol. 81(1), pages 13-26, January.
  10. Simona Mateut & Alessandra Guariglia, . "Inventory Investment, Global Engagement, and Financial Constraints in the UK: Evidence from Micro Data," Discussion Papers 09/09, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  11. Brown, Ward & Haegler, Urs, 2004. "Financing constraints and inventories," European Economic Review, Elsevier, vol. 48(5), pages 1091-1123, October.
  12. Christodoulakis, Nicos & Dimelis, Sophia P & Kollintzas, Tryphon, 1995. "Comparisons of Business Cycles in the EC: Idiosyncracies and Regularities," Economica, London School of Economics and Political Science, vol. 62(245), pages 1-27, February.
  13. Dimelis, Sophia P., 2001. "Inventory investment over the business cycle in the EU and the US," International Journal of Production Economics, Elsevier, vol. 71(1-3), pages 1-8, May.
  14. Alessandra Guariglia, . "The Effects of Financial Constraints on Inventory Investment: Evidence from a Panel of UK Firms," Economics Discussion Papers 462, University of Essex, Department of Economics.
  15. Alan S. Blinder & Louis J. Maccini, 1991. "Taking Stock: A Critical Assessment of Recent Research on Inventories," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 73-96, Winter.
  16. Chikán, Attila & Kovács, Erzsébet, 2009. "Inventory investment and GDP characteristics in OECD countries," International Journal of Production Economics, Elsevier, vol. 118(1), pages 2-9, March.
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