Input and output inventory dynamics
By: by Yi Wen.
Contributors: Federal Reserve Bank of St. Louis.
Series: Working paper -- 2008-008A; Working paper (Federal Reserve Bank of St. Louis : Online) -- 2008-008A.
Publisher: Federal Reserve Bank of St. Louis
Published: 2008
Place of publication: [St. Louis, Mo.]
Language: eng
Format: Electronic resource
Description: "This paper develops an analytically tractable general equilibrium model of inventory dynamics.  Inventories are introduced into a standard RBC model through a precautionary stockout-avoidance motive.  Under persistent aggregate demand shocks, the model is broadly consistent with the U.S.  business cycle and key features of inventory behavior, including (i) a large inventory stock-to-sales ratio and a small inventory investment-to-sales ratio in the long run, (ii) excess volatility of production relative to sales, (iii) procyclical inventory investment but countercyclical stock-to-sales ratio over the business cycle, and (iv) more volatile input inventories than output inventories.  Similar results can also be obtained under persistent aggregate supply shocks"--Federal Reserve Bank of St. Louis web site.
Notes: Title from PDF file as viewed on 3/27/2008.

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