EconStor >
Bank of Canada, Ottawa >
Bank of Canada Discussion Papers >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/66952
  
Title:Inventories, stockouts, and ToTEM PDF Logo
Authors:Kryvtsov, Oleksiy
Zhang, Yang
Issue Date:2010
Series/Report no.:Bank of Canada Discussion Paper 2010-8
Abstract:Inventory investment is an important component of the Canadian business cycle. Despite its small average size - less than 1 per cent of output - it exhibits volatile procyclical fluctuations, accounting for almost one-third of output variance. Procyclicality of inventories is somewhat smaller than that of sales, resulting in a counter-cyclical aggregate inventory-sales ratio. These salient inventory facts are matched in a partialequilibrium version of Kryvtsov and Midrigan's (2010) model in which firms hold stocks of goods to buffer against stockouts. In booms, firms boost their inventories to avoid stocking out due to the rise in demand. The model combines the real marginal cost estimated by ToTEM with the convex cost of adjusting inventories to match the dynamics of the inventory-sales ratio in the data.
Subjects:business fluctuations and cycles
transmission of monetary policy
JEL:E31
E32
Document Type:Working Paper
Appears in Collections:Bank of Canada Discussion Papers

Files in This Item:
File Description SizeFormat
633764264.pdf505.88 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/66952

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.