What inventory behavior tells us about business cycles
By: Mark Bils and James A. Kahn.
Contributors: Kahn, James A.; Federal Reserve Bank of New York.
Series: Staff reports ;; no. 92; Staff reports (Federal Reserve Bank of New York : Online) ;; no. 92.
Publisher: Federal Reserve Bank of New York
Published: 1999
Place of publication: [New York, N.Y.]
Language: eng
Format: Electronic resource
Subjects: Inventories -- Effect of business cycles on -- Econometric models.; Business cycles -- Econometric models.; Manufactures -- Inventories -- Econometric models.
Description: "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 that countercyclical markups arising from a procyclical shadow price of labor are chiefly responsible for the sluggishness of inventories"--Federal Reserve Bank of New York web site.
Notes: Includes bibliographical references.
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