Developments in global inventory investment
Section snippets
Introduction: Purpose and objectives of the study
Even though all economists agree that inventories are important indicators of the nature and dynamics of economic processes, research on the economics of inventories is still relatively scarce. Out of the three major questions of inventory research (namely, the level, structure and fluctuation of inventories), there is only one field where we can claim to have achieved really substantial results: studying inventory fluctuations. There is a good reason for the relative advancement of this
Background: Research on inventory trends
After rather sporadic studies of the economics of inventories (from which the works of Lundberg (1937) and Metzler (1941) are outstanding) the first major study dealing with issues related to our subject is Abramovitz (1950). His conclusions, well supported by statistical data, have had a long-term influence on inventory research in the decades to come. However, the 1950s were the high time of flourishing of operations research, so even economists like Kenneth Arrow published (very fundamental)
Scope, limitations and hypotheses of the research
Our research is aimed to examine a few fundamental questions of macroeconomic inventory behaviour.
Namely, it deals with
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the trends and variances of aggregate inventory investments and
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the connection between economic development, growth and inventory investments.
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It has a very
Inventory investment ratio, as a characterizing norm of economies
We share the view of Kornai 1971, Kornai 1980 that some macroeconomic indicators have a relatively stable “norm” for the various economies and periodic fluctuation goes on “around” this norm. The value of these norms is derived from some structural characteristics of the economy (like its institutional system, market and industry structure, level of economic development, etc.). These norms are standard for some period of development, then of course they can change—depending on the changes in
Inventory investment trends and fluctuations
Annual data of inventory investment/GDP are summarized in Appendix. The same data are plotted in Fig. 3, which of course cannot be used for identifying the trends of the individual countries, but very clearly shows that both the average and the standard deviation of the individual countries from this average shrink.
Fig. 3 indicates that both the linear and polynomial trends are decreasing. The polynomial trend gives a better fit, mainly because of the sharp decrease at the beginning of the
Inventories and country characteristics: Level of development, growth and volatility
The study of the influencing factors of inventory investments at the macroeconomic level should certainly start with looking at the level of development and the speed of growth of the country's economy as the most aggregate factor. In the following these two characteristics are examined. Since on the long run there is an obvious connection between the two, some common conclusions can be drawn.
Conclusion
Our paper's objective was to develop some theses about inventory investment trends across 14 countries and over a 30 year time period. The ambiguity of the data base and the relatively small sample size and the lack of research background on the subject made us to limit our approach to elementary statistical evaluation.
We had formulated six hypotheses for our analysis. The results are mostly supportive, but this support is not very often strong.
H1 is about the level of inventories as a
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Cited by (6)
Inventory investment and sectoral characteristics in some OECD countries
2011, International Journal of Production EconomicsCitation Excerpt :As in the paper by Chikán and Horváth, 1999, we compared trends in 88 countries to determine the connection between the inventory intensity (inventory investment/GDP) of the individual countries and various components of GDP. The current series of papers began in 2003 (Chikán and Tátrai, 2003), when we started to examine data from 14 OECD countries. ( The data are probably the most reliable inventory data available).
Business cycle stylized facts and inventory behaviour: New evidence for the Euro area
2011, International Journal of Production EconomicsCitation Excerpt :Hence, quantitative data exist on inventory investment, but not on inventory stocks. Studies that have explored the relationship between inventory investment and GDP in the Euro area include Dimelis (2001) and Chikan and Tatrai (2003). However, to investigate issues such as the behaviour of inventories over the business cycle and whether advances in inventory management techniques can explain the Great Moderation, inventory stock data are needed.
Inventory investment and production in Europe during the Great Recession: Is there a pattern?
2011, International Journal of Production EconomicsCitation Excerpt :Second, production is more volatile than sales. These two findings have been confirmed by Blinder and Maccini (1991), Hornstein (1998), Dimelis (2001) and Wen (2005) for the US, by Chikán and Tátrai (2003), Wen (2005), Chikán et al. (2005) and Chikán and Kovács (2009) for OECD countries, by Wilkinson (1989), Christodoulakis et al. (1995) and Dimelis (2001) for EU countries and by Chikán and Horváth (1999) for a group of 88 developed and developing countries. A recent strand of the literature including Carpenter et al. (1998), Guariglia (1999), Brown and Haegler (2004), Bagliano and Sembenelli (2004) and Guariglia and Mateut (2010) rationalizes the procyclicality of inventory investment by linking the depletion of inventories to financing constraints which rise during recessions and become less binding during upswings.
Inventory investment and GDP characteristics in OECD countries
2009, International Journal of Production EconomicsMacroeconomic characteristics and inventory investment: A multi-country study
2005, International Journal of Production EconomicsCitation Excerpt :Beside the graphical presentation, ARIIs can be characterized by means and standard deviations of the 14 countries (Appendix A). Using the separation of the total time period to two subperiods (1968–1983 and 1984–1997), as in Chikán and Tátrai (2003), we found that there are big differences between the subperiods. The dividing line between the two subperiods was drawn at 1984, because this year has proved to have special characteristics in previous statistical analyses, see for example McConnell and Perez-Quiros (2000).
Inventories in national economies: A cross-country analysis of macroeconomic data
2018, Inventories in National Economies: A Cross-Country Analysis of Macroeconomic Data