Why Do Real and Nominal Inventory-Sales Ratios Have Different Trends
This note explains the diverging trends between real and nominal aggregate inventory-sales ratios. The combined effect of two features of the data explains the divergence. First, while aggregate sales include both goods and services, inventories include only goods. Second, there has been a strong secular decrease in the relative price of goods. The combination of these two factors causes the real and nominal aggregate inventory-sales ratios to have different trends.
|Date of creation:||Aug 2004|
|Publication status:||published as Ramey, Valerie A. and Daniel J. Vine. "Why Do Real And Nominal Inventory-Sales Rations Have Different Trends?," Journal of Money, Credit and Banking, 2004, v36(5,Oct), 959-963.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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Finance and Economics Discussion Series
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