Inventories and the Propagation of Sectoral Shocks / Russell Cooper, John C. Haltiwanger.

By:

Cooper, Russell

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w2425.Publication details: Cambridge, Mass. National Bureau of Economic Research 1987.Description: 1 online resource: illustrations (black and white)Subject(s):

E - Macroeconomics and Monetary Economics

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Abstract: This paper studies the dynamic properties of an imperfectly competitive economy with inventory holdings. In particular, we focus on the serial correlation in aggregate output and employment produced by the holding of inventories in one sector of the economy and the co-movement between sectors of an economy over the cycle resulting from demand linkages. This model is then contrasted with a simple, competitive real business cycle model with inventories. We find that the predictions of these models with regards to the co-movement of employment may differ. Based on this, we present empirical evidence on the co-movement of employment over the business cycle which is consistent with the predictions of the model of imperfect competition with inventory holdings and demand linkages.

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Working Paper	Biblioteca Digital	Colección NBER	nber w2425 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w24247 Longevity, Education, and Income: How Large is the Triangle? /	nber w24248 Do CCTs Improve Employment and Earnings in the Very Long-Term? Evidence from Mexico /	nber w24249 Do Management Interventions Last? Evidence from India /	nber w2425 Inventories and the Propagation of Sectoral Shocks /	nber w24250 Exchange Traded Funds 101 For Economists /	nber w24251 N-S Trade with Weak Institutions /	nber w24252 The Anatomy of a Trade Collapse: The UK, 1929-33 /	Next

November 1987.

This paper studies the dynamic properties of an imperfectly competitive economy with inventory holdings. In particular, we focus on the serial correlation in aggregate output and employment produced by the holding of inventories in one sector of the economy and the co-movement between sectors of an economy over the cycle resulting from demand linkages. This model is then contrasted with a simple, competitive real business cycle model with inventories. We find that the predictions of these models with regards to the co-movement of employment may differ. Based on this, we present empirical evidence on the co-movement of employment over the business cycle which is consistent with the predictions of the model of imperfect competition with inventory holdings and demand linkages.