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Comments On The Inventory Cycle — Brian Romanchuk

Summary:
Inventories are one driver of the business cycle. A common argument is that the movement towards just-in-time inventories has reduced the inventory cycle, and hence reduced the amplitude of the business cycle. Although plausible, it is very difficult to distinguish this from a lessened amplitude of the business cycle causing less swings in inventories. Since inventory growth is part of investment, one could view it as a subset of the argument that investment trends drive the business cycle (in most cases; sufficiently stupid policy can always cause a recession). (Note: this article is based on some charts and thinking on inventories that is a section in my manuscript on recessions. I am not posting the full text, as I think it has too much background information, and probably needs some

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Inventories are one driver of the business cycle. A common argument is that the movement towards just-in-time inventories has reduced the inventory cycle, and hence reduced the amplitude of the business cycle. Although plausible, it is very difficult to distinguish this from a lessened amplitude of the business cycle causing less swings in inventories. Since inventory growth is part of investment, one could view it as a subset of the argument that investment trends drive the business cycle (in most cases; sufficiently stupid policy can always cause a recession).
(Note: this article is based on some charts and thinking on inventories that is a section in my manuscript on recessions. I am not posting the full text, as I think it has too much background information, and probably needs some serious editing.)
Bond Economics
Comments On The Inventory Cycle
Brian Romanchuk
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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