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
Topics:
Mike Norman considers the following as important: business cycle, inventory cycle, just-in-time inventory
This could be interesting, too:
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
Topics:
Mike Norman considers the following as important: business cycle, inventory cycle, just-in-time inventory
This could be interesting, too:
Mike Norman writes Is Falling Investment Spending The Last Nail In The Coffin? — John T. Harvey
Mike Norman writes End Of Recessions? — Brian Romanchuk
Mike Norman writes Housing and Recessions — Bill McBride
Mike Norman writes Can Fiscal Policy Prevent Recessions? — Brian Romanchuk
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