McMahon, Michael F. (2012) Inventories in motion : a new approach to inventories over the business cycle. Working Paper. Coventry: University of Warwick..

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Abstract

I propose an inventories-in-motion concept which represents a new approach to inventories over the business cycle. This channel has previously been ignored by macroeconomists. I build a general equilibrium business cycle model in which inventories arise naturally as a result of gaps between production of goods and their consumption as goods are distributed. These inventories are actively managed and adjusted to meet consumption and investment needs in the economy. Although conceptually very simple, I show that such inventory behaviour matches a number of stylised facts of aggregate inventories. Nonetheless, my model does not admit an important role for inventory management improvements in declining macroeconomic volatility in the last 30 years.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HF Commerce
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Inventories, Business cycles -- Econometric models
Publisher:	University of Warwick
Place of Publication:	Coventry
Date:	27 March 2012
Number of Pages:	58
Status:	Not Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Open Access
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URI:	http://wrap.warwick.ac.uk/id/eprint/51396

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