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Aggregate dynamics of lumpy agents

  • Donald S. Allen
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    This paper identifies the criteria for dynamic synchronization of the movement of agents who make intermittent adjustment to inventory stocks, leading to "harmonic resonance" rather than cancellation. I use a discrete Markov process model of (S,s) inventory adjustment to establish a theoretical framework for the aggregate dynamics and use simulations to demonstrate the distribution effects of a discrete model of lumpy behavior. The paper identifies circumstances that lead to increased skewness of the distribution of agents over the inventory interval. This has application in financial, labor and commodity markets.

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    File URL: http://research.stlouisfed.org/wp/more/1996-003/
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    File URL: http://research.stlouisfed.org/wp/1996/96-003.pdf
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    Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1996-003.

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    Date of creation: 1996
    Date of revision:
    Publication status: Published in International Journal of Production Economics, March 1999
    Handle: RePEc:fip:fedlwp:1996-003
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    1. Ramey, Valerie A, 1991. "Nonconvex Costs and the Behavior of Inventories," Journal of Political Economy, University of Chicago Press, vol. 99(2), pages 306-34, April.
    2. Giuseppe Bertola & Ricardo J. Caballero, 1990. "Kinked Adjustment Costs and Aggregate Dynamics," NBER Chapters, in: NBER Macroeconomics Annual 1990, Volume 5, pages 237-296 National Bureau of Economic Research, Inc.
    3. Alan S. Blinder & Louis J. Maccini, 1990. "The Resurgence of Inventory Research: What Have We Learned?," NBER Working Papers 3408, National Bureau of Economic Research, Inc.
    4. 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.
    5. Caplin, Andrew S, 1985. "The Variability of Aggregate Demand with (S, s) Inventory Policies," Econometrica, Econometric Society, vol. 53(6), pages 1395-1409, November.
    6. Kahn, James A, 1987. "Inventories and the Volatility of Production," American Economic Review, American Economic Association, vol. 77(4), pages 667-79, September.
    7. Maccini, Louis J & Rossana, Robert J, 1984. "Joint Production, Quasi-Fixed Factors of Production, and Investement in Finished Goods Inventories," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 16(2), pages 218-36, May.
    8. Caplin, Andrew S & Spulber, Daniel F, 1987. "Menu Costs and the Neutrality of Money," The Quarterly Journal of Economics, MIT Press, vol. 102(4), pages 703-25, November.
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