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Inventory investment in Swedish manufacturing firms

Author

Listed:
  • Claes-Håkan Gustafson

    (Department of Economics, University of Örebro, Sweden)

  • Henry Ohlsson

    (Department of Economics, Uppsala University, Sweden)

Abstract

We derive optimal long-run inventory stocks of finished goods and input materials in a dynamic flexible accelerator model. The predictions are tested on aggregate Swedish manufacturing data using an error correction approach. Cointegration regressions yield stationary relationships and parameter estimates with signs predicted by theory. Error correction estimations show that inventories adjust to long-run levels in a year. The cross effect of excess material inventories on finished goods inventories is strong. Inventory investment subsidies significantly affect finished goods inventory investment. Input deliveries are slow to adjust to new output rates.

Suggested Citation

  • Claes-Håkan Gustafson & Henry Ohlsson, 1993. "Inventory investment in Swedish manufacturing firms," Finnish Economic Papers, Finnish Economic Association, vol. 6(2), pages 96-107, Autumn.
    • Handle: RePEc:fep:journl:v:6:y:1993:i:2:p:96-107
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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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