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Journal Article
Evidence of improved inventory control

Inventory data applied to a standard partial stock-adjustment model demonstrate that inventory control, defined by desired marginal inventory-sales ratios and speeds of adjustment, improved in the last decade or so, particularly in the manufacturing sector. In addition, the evidence suggests that, contrary to popular wisdom, the net effect of these changes in inventory control has been to increase the volatility of inventory investment in both the manufacturing and trade sectors.
Economic Review , Volume 78 , Issue Jan , Pages 3-12

Journal Article
Opinion: No quick fix for the housing market

To considerable extend, working down housing inventory will simply take some time.
Econ Focus , Volume 15 , Issue 4Q , Pages 56

Retail inventories, internal finance, and aggregate fluctuations

We investigate the implications of capital market imperfections for inventory investment in retail trade, using a new source firm-level data--the micro data underlying the published Quarterly Financial Reports. An error-correction model that includes internal funds and forward-looking expectations for the stochastic process of sales is not rejected by the data. Both the cross-sectional and time-series results are consistent with the existence of significant capital market frictions in the retail trade sector: (1) for firms with limited access to capital markets, internal funds are a ...
Research Paper , Paper 9722

A reexamination of the inventory buffer effect with disaggregate data

Research Paper , Paper 8817

What inventory behavior tells us about business cycles

We argue that the behavior of manufacturing inventories provides evidence against models of business cycle fluctuations based on productivity shocks, increasing returns to scale, or favorable externalities, whereas it is consistent with models with short-run diminishing returns. Finished goods inventories move proportionally much less than sales or production over the business cycle, which we show implies procyclical marginal cost and countercyclical price markups. Obvious measures for marginal cost do not show high marginal cost near peaks, as required to rationalize the inventory behavior, ...
Research Paper , Paper 9817

The national and regional economic outlook

Remarks at the Long Island Association, Melville, New York.
Speech , Paper 76

Regional economy and manufacturing update

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

Microeconomic inventory adjustment: evidence from U.S. firm-level data

We examine inventory adjustment in the U.S. manufacturing sector using quarterly firm-level data over the period 1978-97. Our evidence indicates that the inventory investment process is nonlinear and asymmetric, results consistent with a nonconvex adjustment cost structure. The inventory adjustment process differs over the business cycle: for a given level of excess inventories, firms disinvest more in recessions than they do in expansions. The inventory adjustment process has changed little between the 1980s and 1990s, suggesting that recent advances in inventory control have had little ...
Staff Reports , Paper 101

Trade inventories

We examine the behavior of trade inventories using both industry-level and high-frequency firm-level data. The cost structure underlying the firm's optimization problem--convex delivery costs vs. fixed costs of ordering--provides the two competing hypotheses. In the presence of fixed costs (S,s) inventory policies are optimal, and steady-state reduced-form predictions regarding the dynamics of inventories and sales can be used to test the model. The alternative of convex delivery costs is provided by structural estimation of a linear-quadratic (L-Q) model. At the industry level, the results ...
Staff Reports , Paper 53

What inventory behavior tells us about business cycles

Manufacturers' finished goods inventories are less cyclical than shipments. This requires marginal cost to be more procyclical than is conventionally measured. In this paper, alternative marginal cost measures for six manufacturing industries are constructed. These measures, which attribute high-frequency productivity shocks to procyclical work effort, are more successful in accounting for inventory behavior. Evidence is also provided that the short-run slope of marginal cost arising from convexity of the production function is close to zero for five of the six industries. The paper concludes ...
Staff Reports , Paper 92



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