Inventory, Business Cycles and Monetary Transmission

Inventory changes constitute in all countries a small fraction of the Gross National Product (GNP) but also a major source or an indicator of cyclical fluctuations. In this volume both possible ways of propagation are investigated by examining in the first part what macroeconomists have learned and still have to learn about inventories in the light of statistical definitions and problems. In the second part, the role of monetary shocks in propagating business cycles is considered through liquidity effects and in relation to inventory adjustment. A possible linkage between inventory and labour markets is shown. Finally, new evidence and theoretical insights are provided on the linear-quadratic inventory model and its ability to discriminate econometrically among competing firm behaviour.