Inventory investment and production in Europe: is there a pattern?

Yngve Abrahamsen (abrahamsen@kof.ethz.ch) and Jochen Hartwig
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Yngve Abrahamsen: KOF Swiss Economic Institute, ETH Zurich, Switzerland

No 11-271, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

Abstract: The paper investigates the nexus between inventory investment and the change in aggregate production for 29 European countries over the period 2000-2009. A special interest is taken in the "Great Recession" of 2008/09. For most countries, a fairly uniform pattern emerges. Inventory investment is positively correlated with changes in production and follows the latter with a time-lag of two to three quarters. Therefore, there is no evidence that inventory investment either drives or smoothes the business cycle. Very few countries - Austria, Greece, Spain, and Switzerland - diverge from the typical pattern. This might hint to problems with respect to data quality.

Keywords: Inventory investment; Production; Business cycle; "Great Recession" in Europe (search for similar items in EconPapers)
Pages: 24 pages
Date: 2011-01
New Economics Papers: this item is included in nep-eec, nep-eur and nep-mac
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Citations: View citations in EconPapers (1)

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http://dx.doi.org/10.3929/ethz-a-006341658 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:kof:wpskof:11-271

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