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

Author/Editor:

Willy A Hoffmaister ; Jens R Clausen

Publication Date:

September 1, 2010

Electronic Access:

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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. 2010/212

Subject:

Business cycles Econometric analysis Economic growth Economic theory Employment protection Labor Production Production growth Supply shocks Vector autoregression

English

Publication Date:

September 1, 2010

ISBN/ISSN:

9781455205431/1018-5941

Stock No:

WPIEA2010212

Pages:

38

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