Cyclical Behavior of Inventories and Growth Projections Recent Evidence From Europe and the United States

Alexander Hoffmaister and Jens Clausen

No 2010/212, IMF Working Papers from International Monetary Fund

Abstract: In the United States and a few European countries, inventory behavior is mainly the outcome of demand shocks: a standard buffer-stock model best characterizes these economies. But most European countries are described by a modified buffer-stock model where supply shocks dominate. In contrast to the United States, inventories boost growth with a one-year lag in Europe. Moreover, inventories provide limited information to improve growth forecasts particularly when a modified buffer-stock model characterizes inventory behavior.

Keywords: WP; stock; inventory behavior; buffer-stock model; Inventories; business cycle; forecasting; inventory investment; foresight inventory model; stylized fact; inventory change; inventories stem; Production growth; Business cycles; Employment protection; Vector autoregression; Supply shocks; Europe (search for similar items in EconPapers)
Pages: 38
Date: 2010-09-01
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Citations: View citations in EconPapers (2)

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