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Inventories And Fixed Investment

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  • HONG BO

Abstract

We model fixed investment incorporating the inventory decision of the firm. Using Dutch listed nonfinancial firms during 1985–2000, we find that the inventory stock is negatively associated with fixed investment. The results suggest that the inventory stock may be used by the firm as a buffer in response to unexpectedly high demand. In addition, the firm may hold the inventory stock as a contingency substitute for the financial source of fixed investment.

Suggested Citation

  • Hong Bo, 2004. "Inventories And Fixed Investment," Australian Economic Papers, Wiley Blackwell, vol. 43(4), pages 406-421, December.
    • Handle: RePEc:bla:ausecp:v:43:y:2004:i:4:p:406-421
    DOI: 10.1111/j.1467-8454.2004.00236.x
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    References listed on IDEAS

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    1. Stephen Bond & Anke Hoeffler & Jonathan Temple, 2001. "GMM Estimation of Empirical Growth Models," Economics Papers 2001-W21, Economics Group, Nuffield College, University of Oxford.
    2. Stephen Bond & Anke Hoeffler, 2001. "GMM Estimation of Empirical Growth Models," Economics Series Working Papers 2001-W21, University of Oxford, Department of Economics.
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