Inventories and Business Cycle Volatility: An Analysis Based on ISAE Survey Data

Malgarini, Marco

Inventories and Business Cycle Volatility: An Analysis Based on ISAE Survey Data

Journal of Business Cycle Measurement and Analysis, 2008, vol. 2007, issue 2, 175-197

Abstract: The paper looks at an often debated issue – the decline observed in business cycle volatility – using qualitative data derived from Business Tendency Surveys. It concentrates on the manufacturing sector, providing evidence that volatility slowdown is attributable to a break in the Data Generating Process (Cecchetti, Flores-Lagunes and Krause, 2006) rather than to a long trend decline (Blanchard and Simon, 2001). Moreover, it shows that lower variance of the ISAE Confidence Indicator is mostly explained by the behaviour of firms' assessments of demand and inventories. In particular, inventories volatility has decreased, while volatility of production has instead increased with respect to that of demand. Both of these results are consistent with the claim that better inventories management should have a specific role in shaping the production decisions of the firms (Wen, 2005).

Keywords: Inventories; Business cycle; Business cycle volatility (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (3)

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Working Paper: Inventories and business cycle volatility: an analysis based on ISAE survey data (2007)
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