"We examine the microeconomic and aggregate inventory dynamics in the business sector of the U.S. economy. We employ high-frequency firm-level data and use an empirically tractable model, in which the aggregate dynamics are derived explicitly from the underlying microeconomic data. Our results show that the microeconomic adjustment function in both the manufacturing and trade sectors is nonlinear and asymmetric, results consistent with firms using (S, s)-type inventory policies. There are differences in the estimated adjustment functions between the two sectors as well as the durable and nondurable goods firms within each sector. The estimated adjustment function is remarkably stable across subperiods, indicating little change in the inventory adjustment process over time. As predicted by our model, higher moments of the cross-sectional distribution of inventory deviations affect aggregate inventory dynamics"--Abstract

We examine inventory adjustment in the U.S. manufacturing sector using quarterly firm-level data over the period 1978-97. Our evidence indicates that the inventory investment process is nonlinear and asymmetric, results consistent with a nonconvex adjustment cost structure. The inventory adjustment process differs over the business cycle: for a given level of excess inventories, firms disinvest more in recessions than they do in expansions. The inventory adjustment process has changed little between the 1980s and 1990s, suggesting that recent advances in inventory control have had little effect on adjustment costs. Nevertheless, the optimal inventory-sales ratio in the durable goods sector has declined significantly during our sample period.

This text is designed to provide a comprehensive guide to students, researchers, or consultants who wish to carry out and to interpret analyses of economic performance, with an emphasis on productivity growth. The text includes an overview of standard productivity growth measurement techniques and adaptations, and data construc tion procedures. It goes further, however, by expanding the tradition al growth accounting (index number) framework to allow consider ation of how different aspects of firm behavior underlying productivity growth are interrelated, how they can be measured con sistently in a parametric model, and how they permit a well-defined decomposition of standard productivity growth measures. These ideas are developed by considering in detail a number of underlying theoretical results and econometric issues. The impacts of various production characteristics on productivity growth trends are also evaluated by overviewing selected methodological extensions and em pirical evidence. More specifically, in the methodological extensions, emphasis is placed on incorporation of cost and demand characteristics, such as fixity and adjustment costs, returns to scale, and the existence of market power, into analyses of productivity growth. These character istics, generally disregarded in such analyses, can have very important impacts on production structure and firm behavior, and thus on economic performance. They also provide the conceptual basis for vii viii PREFACE measures that are often used independently as indicators of economic performance, such as investment, capacity utilization, and profit measures.

The principles underlying the recording of changes in inventories are explained in the System of National Accounts, 1993 (1993 SNA), but operational guidelines on their measurement are lacking. This paper elaborates specific statistical techniques and their underlying assumptions for calculating changes in inventories and holding gains when only data on stocks of inventories are available. Several data situations are considered. The authors propose methods for measuring changes in inventories that meet the 1993 SNA principles. The paper also explores possibilities for implementing the proposed improvements and explains the interpretation of data on changes in inventories.

This book introduces a new approach in the field of macroeconomic inventory studies: the use of multivariate statistics to evaluate long-term characteristics of inventory investments in developed countries. By analyzing a 44-year period series of annual inventory change in percentage of GDP in a set of OECD countries, disclosing their relationship to growth, industry structure and alternative uses of GDP (fixed capital investments, foreign trade and consumption), it fills a gap in the economic literature. It is generally accepted that inventories play an important role in all levels of the economy. However, while there is extensive literature on micro- (and even item-) level inventory problems, macroeconomic inventory studies are scarce. Both the long-term processes of inventory formation and their correlation with other macroeconomic factors provide interesting conclusions about economic changes and policies in our immediate past, and present important insights for the future.

Accompanying CD-ROM contains ... "the Mathematica programs discussed in the book and MathReader software (a viewing program from Wolfram, Inc.)."--Page 4 of cover.

This discourse on the conference proceedings unveils Sir John Hicks's efforts to discuss capital/income family of concepts with their principal characteristics of inter-temporality. Papers on capital, profits, the concept of invariant capital stock and Kaleckian theory of investment are discussed.