The Resurgence of Inventory Research: What Have We Learned?
Alan S. Blinder
Louis J. Maccini
Recent empirical and theoretical research on business inventories is
surveyed and critically evaluated. While most inventory research has had
macroeconomic motivations, we focus on its microtheoretic basis and on
potential conflicts between theory and evidence.
The paper asks two principal questions. First, how can inventories,
which are allegedly used by firms to stabilize production, nonetheless be a
destabilizing factor at the macroeconomic level? Second, why, if firms are
following the production-smoothing model, is production more variable than
sales in many industries? We suggest that the so-called (S,s) model may help
answer both questions.
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