Microeconomic inventory adjustment and aggregate dynamics
By: Jonathan McCarthy and Egon Zakrajsek.
Contributors: Zakrajsek, Egon.; Federal Reserve Bank of New York.
Series: Staff reports ;; no. 54; Staff reports (Federal Reserve Bank of New York : Online) ;; no. 54.
Publisher: Federal Reserve Bank of New York
Published: 1998
Place of publication: [New York, N.Y.]
Language: eng
Format: Electronic resource
Subjects: Business cycles -- United States -- Econometric models.; Inventories -- United States -- Econometric models.
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.
Notes: Includes bibliographical references.
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