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Journal Article
The increasing importance of retailers' inventories

Although inventory--sales (IS) ratios and inventory volatility have declined somewhat since the early 1980s, little evidence supports the view that declining IS ratios are associated with declines in inventory investment volatility. In the retail sector, IS ratios have risen and inventory investment volatility has, at best, not increased, pointing to a more significant role in future cyclical fluctuations.
Economic Perspectives , Volume 22 , Issue Q III

Discussion Paper
(S,s) inventory policies in general equilibrium

We study the aggregate implications of (S,s) inventory policies in a dynamic general equilibrium model. Firms in the model's retail sector face idiosyncratic demand risk, and (S,s) inventory policies are optimal because of fixed order costs. The model economy replicates salient features of the business cycle and reconciles evidence that orders are more volatile than sales, and that inventory investment is positively correlated with sales. There are two main results. First, we find that general equilibrium effects and the optimal order size are important for the economy's response to exogenous ...
Discussion Paper / Institute for Empirical Macroeconomics , Paper 104

Working Paper
What Drives Inventory Accumulation? News on Rates of Return and Marginal Costs

We study the effects of news shocks on inventory accumulation in a structural VAR framework. We establish that inventories react strongly and positively to news about future increases in total factor productivity. Theory suggests that the transmission channel of news shocks to inventories works through movements in marginal costs, through movements in sales, or through interest rates. We provide evidence that changes in external and internal rates of return are central to the transmission for such news shocks. We do not find evidence of a strong substitution effect that shifts production from ...
Working Paper , Paper 19-18

A strategy for the 2011 economic recovery

Remarks at Dominican College, Orangeburg, New York.
Speech , Paper 41

Working Paper
Why does inventory investment fluctuate so much during contractions?

Inventory investment appears to have a significant impact on the movement of aggregate output during business cycle contractions. Recent empirical evidence has raised doubts about the often used assumption of a buffer-stock/production-smoothing motivation for inventory. Work by Blinder and Maccini suggests that the use of an (S,s), or intermittent adjustment decision rule, better explains the stylized facts of the dynamics of inventory investment. This has led to the focus on the (S,s) as an alternative to production-smoothing. I assume that some agents use the (S,s) adjustment rule while ...
Working Papers , Paper 1994-029

Journal Article
Improving production management

National Economic Trends , Issue Apr

Working Paper
Leverage as a state variable for employment, inventory accumulation, and fixed investment

Finance and Economics Discussion Series , Paper 94-24

Working Paper
What inventories tell us about aggregate fluctuations -- a tractable approach to (S,s) policies

We estimate a DSGE model with (S,s) inventory policies. We find that (i) taking inventories into account can significantly improve the empirical fit of DSGE models in matching the standard business-cycle moments (in addition to explaining inventory fluctuations); (ii) (S,s) inventory policies can significantly amplify aggregate output fluctuations, in contrast to the findings of the recent general-equilibrium inventory literature; and (iii) aggregate demand shocks become more important than technol- ogy shocks in explaining the business cycle once inventories are incorporated into the model. ...
Working Papers , Paper 2012-059

Journal Article
The role of inventories in the business cycle

Changes in the stock of firms' inventories are an important component of the business cycle. In fact, discussion about the timing of a recovery following a recession often focuses on inventories. In "The Role of Inventories in the Business Cycle," Aubhik Khan surveys the facts about inventory investment over the business cycle, then discusses two leading theories that may explain these observations.
Business Review , Issue Q3 , Pages 38-45

Regional economy and manufacturing update

Remarks at the Quarterly Regional Economic Press Briefing, New York City.
Speech , Paper 28



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