Cyclical Behavior of Inventories and Growth Projections Recent Evidence From Europe and the United States

September 1, 2010

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Willy A Hoffmaister, and Jens R Clausen. Cyclical Behavior of Inventories and Growth Projections Recent Evidence From Europe and the United States, (USA: International Monetary Fund, 2010) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

In the United States and a few European countries, inventory behavior is mainly the outcome of demand shocks: a standard buffer-stock model best characterizes these economies. But most European countries are described by a modified buffer-stock model where supply shocks dominate. In contrast to the United States, inventories boost growth with a one-year lag in Europe. Moreover, inventories provide limited information to improve growth forecasts particularly when a modified buffer-stock model characterizes inventory behavior.

Subject: Business cycles, Econometric analysis, Economic growth, Economic theory, Employment protection, Labor, Production, Production growth, Supply shocks, Vector autoregression

Keywords: Buffer-stock model, Business cycle, Business cycles, Employment protection, Europe, Forecasting, Foresight inventory model, Inventories, Inventories stem, Inventory behavior, Inventory change, Inventory investment, Production growth, Stock, Stylized fact, Supply shocks, Vector autoregression, WP

Publication Details

Pages:

38
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/212
Stock No:

WPIEA2010212
ISBN:

9781455205431
ISSN:

1018-5941

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