Cyclical Behavior of Inventories and Growth Projections Recent Evidence from Europe and the United States

Author/Editor: Clausen, Jens R. ; Hoffmaister, Alexander W.
Publication Date: September 01, 2010
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: In the United States and a few European countries, inventory behavior is mainly the outcome of demand shocks: a standard buffer-stock model best characterizes these economies. But most European countries are described by a modified buffer-stock model where supply shocks dominate. In contrast to the United States, inventories boost growth with a one-year lag in Europe. Moreover, inventories provide limited information to improve growth forecasts particularly when a modified buffer-stock model characterizes inventory behavior.
Series: Working Paper No. 10/212
Subject(s): Business cycles | Cross country analysis | Europe | Forecasting models | Manufacturing sector | Production growth | United States

Author's Keyword(s): Inventories | business cycle | forecasting
Publication Date: September 01, 2010
Format: Paper
Stock No: WPIEA2010212 Pages: 38
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