Buffer Stock Money and the Company Sector
This paper investigates the role of financial buffer stocks in company sector decisions. A stylized.analytic model is used to consider how adjustment costs in changing dividends can generate a role for a financial buffer stock in any expenditure decision by the firm which has a influence beyond the current period. Cointegration techniques are then used to focus on the desired holding of financial buffers by the U.K. industrial and commercial companies. When included in a number of company sector expenditure equations taken from the National Institute's U.K. macro model these measures of desired holdings were in the main correctly signed. The authors find support for the view that reducing stocks was one of the most common ways of improving liquidity and also evidence of strong effects on employment and investment. Copyright 1992 by Royal Economic Society.
Volume (Year): 44 (1992)
Issue (Month): 2 (April)
|Contact details of provider:|| Postal: |
Fax: 01865 267 985
Web page: http://oep.oupjournals.org/
|Order Information:||Web: http://www.oup.co.uk/journals|
When requesting a correction, please mention this item's handle: RePEc:oup:oxecpp:v:44:y:1992:i:2:p:209-31. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.