Interrelated Demands for Buffer Stocks and Productive Inputs: Estimates for Two-Digit Manufacturing Industries

Robert Rossana ()

The Review of Economics and Statistics, 1990, vol. 72, issue 1, 19-29

Abstract: Empirical estimates of interrelated factor demand equations for inventories, labor inputs, capital stocks, and unfilled orders in selected two-digit industries are provided. This framework is more comprehensive than previous research as it disaggregates inventories by stage of fabrication, accounts for production-to-stock and production-to-order, and disaggregates capital and labor inputs. All estimated decision rules display stock-adjustment effects, but there are asymmetries in the parameter estimates that are puzzling. There is evidence that factor input prices have a role in explaining stock levels, but own-factor price effects are largely absent. Evidence is uncovered that stocks are sensitive to expectations errors attached to output demand. Copyright 1990 by MIT Press.

Date: 1990
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