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Business cycle stylized facts and inventory behaviour: New evidence for the Euro area

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  • Cesaroni, Tatiana
  • Maccini, Louis
  • Malgarini, Marco

Abstract

The purpose of this paper is for the first time to use Business Tendency Survey data, first, to identify new facts that are useful for the interpretation of the decline in the volatility of real activity in the Euro area, and, second, to test the inventory management hypothesis as an explanation for the Great Moderation in Europe. We present stylized facts from the Business Tendency data on series for inventories, current production, current orders, and expected production for the Euro area, emphasizing the decline in the volatility of the series. Further, we investigate whether the decline in inventory volatility can be attributed to an endogenous change in the persistence of shocks to the accumulation dynamics of inventories or to an exogenous change in the shocks hitting the inventory optimisation process. Our results at Euro level generally indicate that there is no evidence of a break in the inventory accumulation process. On the contrary, the impact of exogenous shocks on inventory volatility appears to be steadily declining over time, beginning from the mid-1980s.

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

Volume (Year): 133 (2011)
Issue (Month): 1 (September)
Pages: 12-24

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Handle: RePEc:eee:proeco:v:133:y:2011:i:1:p:12-24
Contact details of provider: Web page: http://www.elsevier.com/locate/ijpe

Keywords: Business cycle stylized facts Inventory behaviour European Business Tendency Survey data;

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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; Diffusion Processes; State Space Models
  • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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Cited by:

  1. Tiziana Cesaroni & Stefano Iezzi, 2015. "The Predictive Content of Business Survey Indicators: evidence from SIGE," Working Papers LuissLab 15118, Dipartimento di Economia e Finanza, LUISS Guido Carli.
  2. Luciana Crosilla & Marco Malgarini, 2011. "Behavioural models for manufacturing firms: analysing survey data," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2011(4), pages 139-163.
  3. Obermaier, Robert, 2012. "German inventory to sales ratios 1971–2005—An empirical analysis of business practice," International Journal of Production Economics, Elsevier, vol. 135(2), pages 964-976.
  4. Cesaroni, Tatiana & De Santis, Roberta, 2015. "Current Account ‘Core-Periphery Dualism’ in the EMU," CEPS Papers 10317, Centre for European Policy Studies.
  5. Alexander W. Hoffmaister & Jens R Clausen, 2010. "Cyclical Behavior of Inventories and Growth Projections Recent Evidence From Europe and the United States," IMF Working Papers 10/212, International Monetary Fund.
  6. Tatiana Cesaroni, 2015. "Procyclicality of credit rating systems: how to manage it," Mo.Fi.R. Working Papers 109, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  7. Tatiana Cesaroni & Roberta De Santis, 2014. "Current account "core-periphery dualism" in the EMU," Temi di discussione (Economic working papers) 996, Bank of Italy, Economic Research and International Relations Area.
  8. Ashoka Mody & Alina Carare, 2010. "Spillovers of Domestic Shocks; Will They Counteract the “Great Moderation†?," IMF Working Papers 10/78, International Monetary Fund.
  9. repec:agr:journl:v:10(587):y:2013:i:10(587):p:97-110 is not listed on IDEAS
  10. Malgarini, Marco, 2012. "Industrial production and Confidence after the crisis: what's going on?," MPRA Paper 53813, University Library of Munich, Germany.

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