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Inventory investment and production in Europe: is there a pattern?

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Abstract

The paper investigates the nexus between inventory investment and the change in aggregate production for 29 European countries over the period 2000-2009. A special interest is taken in the "Great Recession" of 2008/09. For most 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. Therefore, there is no evidence that inventory investment either drives or smoothes the business cycle. 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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  • Yngve Abrahamsen & Jochen Kurt Hartwig, 2011. "Inventory investment and production in Europe: is there a pattern?," KOF Working papers 11-271, KOF Swiss Economic Institute, ETH Zurich.
  • Handle: RePEc:kof:wpskof:11-271
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    File URL: http://dx.doi.org/10.3929/ethz-a-006341658
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    References listed on IDEAS

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    1. Maria De Paola & Vincenzo Scoppa, 2010. "A signalling model of school grades under different evaluation systems," Journal of Economics, Springer, vol. 101(3), pages 199-212, November.
    2. Mühlemann, Samuel & Wolter, Stefan C. & Wüest, Adrian, 2009. "Apprenticeship Training and the Business Cycle," IZA Discussion Papers 4460, Institute for the Study of Labor (IZA).
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    Cited by:

    1. Abrahamsen, Yngve & Hartwig, Jochen, 2011. "Inventory investment and production in Europe during the "Great Recession": Is there a pattern?," International Journal of Production Economics, Elsevier, vol. 132(2), pages 174-177, August.

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    Keywords

    Inventory investment; Production; Business cycle; Great Recession in Europe;

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