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Inventories in ToTEM

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  • Oleksiy Kryvtsov
  • Yang Zhang

Abstract

ToTEM – the Bank of Canada’s principal projection and policy-analysis model for the Canadian economy – is extended to include inventories. In the model, firms accumulate inventories of finished goods for their role in facilitating the demand for goods. The model is successful in matching procyclical and volatile inventory investment behaviour. The authors show that the convex cost of stock adjustment is key to the model’s ability to match the inventory data quantitatively.

Suggested Citation

  • Oleksiy Kryvtsov & Yang Zhang, 2010. "Inventories in ToTEM," Discussion Papers 10-9, Bank of Canada.
    • Handle: RePEc:bca:bocadp:10-9
    DOI: 10.34989/sdp-2010-9
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    References listed on IDEAS

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    1. Oleksiy Kryvtsov & Yang Zhang, 2010. "Inventories, Stockouts, and ToTEM," Discussion Papers 10-8, Bank of Canada.
    2. James A. Kahn & Mark Bils, 2000. "What Inventory Behavior Tells Us about Business Cycles," American Economic Review, American Economic Association, vol. 90(3), pages 458-481, June.
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    Cited by:

    1. Oleksiy Kryvtsov & Virgiliu Midrigan, 2011. "Inventories, Markups and Real Rigidities in Sticky Price Models of the Canadian Economy," Staff Working Papers 11-9, Bank of Canada.

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    More about this item

    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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