Is There News in Inventories?

Christoph Görtz, Christopher Gunn and Thomas A. Lubik

No 8284, CESifo Working Paper Series from CESifo

Abstract: We identify total factor productivity (TFP) news shocks using standard VAR methodology and document a new stylized fact: in response to news about future increases in TFP, inventories rise and comove positively with other major macroeconomic aggregates. We show that the standard theoretical model used to capture the effects of news shocks cannot replicate this fact when extended to include inventories. To explain the empirical inventory behavior, we therefore develop a framework that relies on the presence of knowledge capital accumulated through a learning-by-doing process. The desire to take advantage of higher future TFP through knowledge capital drives output and hours choices on the arrival of news and leads to inventory accumulation alongside the other macroeconomic variables. The broad-based comovement we document supports the view that news shocks are an important driver of aggregate fluctuations.

Keywords: news shocks; business cycles; inventories; knowledge capital; VAR (search for similar items in EconPapers)
JEL-codes: E20 E30 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Is there news in inventories? (2022)
Working Paper: Is There News in Inventories? (2021)
Working Paper: Is There News in Inventories? (2020)
Working Paper: Is There News in Inventories? (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8284

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