Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/53780 
Year of Publication: 
2009
Series/Report no.: 
Bank of Canada Working Paper No. 2009-9
Publisher: 
Bank of Canada, Ottawa
Abstract: 
Kryvtsov and Midrigan (2008) study the behavior of inventories in an economy with menu costs, fixed ordering costs and the possibility of stock-outs. This paper extends their analysis to a richer setting that is capable of more closely accounting for the dynamics of the US business cycle. We find that the original conclusion survives in this setting: namely, the model requires an elasticity of real marginal cost to output approximately equal to the inverse intertemporal elasticity of substitution in consumption in order to account for the countercyclicality of the aggregate inventory-to-sales ratio in the data.
Subjects: 
Business fluctuations and cycles
Transmission of monetary policy
JEL: 
E31
F12
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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