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Inventory investment in Swedish manufacturing firms

Claes-Håkan Gustafson and Henry Ohlsson
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Claes-Håkan Gustafson: Department of Economics, University of Örebro, Sweden

Finnish Economic Papers, 1993, vol. 6, issue 2, 96-107

Abstract: We derive optimal long-run inventory stocks of finished goods and input materials in a dynamic flexible accelerator model. The predictions are tested on aggregate Swedish manufacturing data using an error correction approach. Cointegration regressions yield stationary relationships and parameter estimates with signs predicted by theory. Error correction estimations show that inventories adjust to long-run levels in a year. The cross effect of excess material inventories on finished goods inventories is strong. Inventory investment subsidies significantly affect finished goods inventory investment. Input deliveries are slow to adjust to new output rates.

JEL-codes: E22 (search for similar items in EconPapers)
Date: 1993
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Working Paper: Inventory Investment in Swedish Manufacturing Firms - an error Correction Analysis (1991)
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Handle: RePEc:fep:journl:v:6:y:1993:i:2:p:96-107