Cyclical Behavior of Inventories and Growth Projections Recent Evidence From Europe and the United States
September 1, 2010
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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.
Subject: Business cycles, Econometric analysis, Economic growth, Economic theory, Employment protection, Labor, Production, Production growth, Supply shocks, Vector autoregression
Keywords: buffer-stock model, business cycle, Business cycles, Employment protection, Europe, forecasting, foresight inventory model, Inventories, inventories stem, inventory behavior, inventory change, inventory investment, Production growth, stock, stylized fact, Supply shocks, Vector autoregression, WP
Pages:
38
Volume:
2010
DOI:
Issue:
212
Series:
Working Paper No. 2010/212
Stock No:
WPIEA2010212
ISBN:
9781455205431
ISSN:
1018-5941
