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INVENTORIES, FLUCTUATIONS, AND GOODS SECTOR CYCLES

Published online by Cambridge University Press:  14 December 2012

Louis J. Maccini  and
Adrian Pagan
Louis J. Maccini
Affiliation:
Johns Hopkins University
Adrian Pagan*
Affiliation:
University of Sydney
*
Address correspondence to: Adrian Pagan, School of Economics, Faculty of Arts and Social Sciences, Merewether Building (H04), The University of Sydney, NSW 2006, Australia; e-mail: Adrian.Pagan@sydney.edu.au.
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Abstract

The paper looks at the role of inventories in U.S. cycles and fluctuations. It concentrates on the goods-producing sector and constructs a model that features both input and output inventories. A range of shocks are present in the model, including sales, technology, and inventory cost shocks. It is found that the presence of inventories does not change the average goods sector–cycle characteristics in the United States very much. The model is also used to examine whether new techniques for inventory control might have been an important factor contributing to the decline in the volatility of U.S. GDP growth. It is found that these would have had little impact upon the level of volatility.

Keywords

Business CyclesInventory DynamicsGreat Moderation
Type
Articles
Information
Macroeconomic Dynamics , Volume 17 , Issue 1 , January 2013 , pp. 89 - 122
Copyright
Copyright © Cambridge University Press 2012

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