Microeconomic inventory adjustment and aggregate dynamics

Description

"We examine the microeconomic and aggregate inventory dynamics in the business sector of the U.S. economy. We employ high-frequency firm-level data and use an empirically tractable model, in which the aggregate dynamics are derived explicitly from the underlying microeconomic data. Our results show that the microeconomic adjustment function in both the manufacturing and trade sectors is nonlinear and asymmetric, results consistent with firms using (S,s)-type inventory policies. There are differences in the estimated adjustment functions between the two sectors as well as the durable and nondurable goods firms within each sector. The estimated adjustment function is remarkably stable across subperiods, indicating little change in the inventory adjustment process over time. As predicted by our model, higher moments of the cross-sectional distribution of inventory deviations affect aggregate inventory dynamics"--Federal Reserve Bank of New York web site.

Subjects

Series Statement

• Staff reports ;
• no. 54
• Staff reports (Federal Reserve Bank of New York : Online) ;

Links

• http://www.ny.frb.org/research/staff_reports/sr54.html
• URL

Other Editions

• Microeconomic inventory adjustment and aggregate dynamicsElectronic resourceFederal Reserve Bank of New York1998-01-01
• Microeconomic inventory adjustment and aggregate dynamicsElectronic resourceBank for International Settlements, Monetary and Economic Dept.1999-01-01