IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v132y2011i2p174-177.html
   My bibliography  Save this article

Inventory investment and production in Europe during the "Great Recession": Is there a pattern?

Author

Listed:
  • Abrahamsen, Yngve
  • Hartwig, Jochen

Abstract

The paper examines the nexus between inventory investment and the change in aggregate production during the "Great Recession" of 2008/09 for 29 European countries. A fairly uniform pattern emerges. Inventory investment is positively correlated with changes in production and follows the latter with a time-lag of two to three quarters. Very few countries (Austria, Greece, Spain and Switzerland) diverge from the typical pattern. This might hint to problems with respect to data quality.

Suggested Citation

  • Abrahamsen, Yngve & Hartwig, Jochen, 2011. "Inventory investment and production in Europe during the "Great Recession": Is there a pattern?," International Journal of Production Economics, Elsevier, vol. 132(2), pages 174-177, August.
    • Handle: RePEc:eee:proeco:v:132:y:2011:i:2:p:174-177
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527311001587
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jochen Hartwig, 2009. "Trying to assess the quality of macroeconomic data: The case of Swiss labour productivity growth as an example," OECD Journal: Journal of Business Cycle Measurement and Analysis, OECD Publishing, Centre for International Research on Economic Tendency Surveys, vol. 2008(1), pages 37-61.
    2. Chikan, Attila & Kovacs, Erzsebet & Tatrai, Tunde, 2005. "Macroeconomic characteristics and inventory investment: a multi-country study," International Journal of Production Economics, Elsevier, vol. 93(1), pages 61-73, January.
    3. Alan S. Blinder & Louis J. Maccini, 1991. "Taking Stock: A Critical Assessment of Recent Research on Inventories," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 73-96, Winter.
    4. Brown, Ward & Haegler, Urs, 2004. "Financing constraints and inventories," European Economic Review, Elsevier, vol. 48(5), pages 1091-1123, October.
    5. Alessandra Guariglia, 1999. "The Effects of Financial Constraints on Inventory Investment: Evidence from a Panel of UK Firms," Economica, London School of Economics and Political Science, vol. 66(261), pages 43-62, February.
    6. Chikan, Attila & Tatrai, Tunde, 2003. "Developments in global inventory investment," International Journal of Production Economics, Elsevier, vol. 81(1), pages 13-26, January.
    7. Yngve Abrahamsen & Jochen Kurt Hartwig, 2011. "Inventory investment and production in Europe: is there a pattern?," KOF Working papers 11-271, KOF Swiss Economic Institute, ETH Zurich.
    8. Guariglia, Alessandra & Mateut, Simona, 2010. "Inventory investment, global engagement, and financial constraints in the UK: Evidence from micro data," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 239-250, March.
    9. Fabio Bagliano & Alessandro Sembenelli, 2004. "The cyclical behaviour of inventories: European cross-country evidence from the early 1990s recession," Applied Economics, Taylor & Francis Journals, vol. 36(18), pages 2031-2044.
    10. Chikán, Attila & Kovács, Erzsébet, 2009. "Inventory investment and GDP characteristics in OECD countries," International Journal of Production Economics, Elsevier, vol. 118(1), pages 2-9, March.
    11. Andreas Hornstein, 1998. "Inventory investment and the business cycle," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 49-71.
    12. Wen, Yi, 2005. "Understanding the inventory cycle," Journal of Monetary Economics, Elsevier, vol. 52(8), pages 1533-1555, November.
    13. Wilkinson, Maurice, 1989. "Aggregate inventory behavior in large European economies," European Economic Review, Elsevier, vol. 33(1), pages 181-194, January.
    14. repec:bla:econom:v:62:y:1995:i:245:p:1-27 is not listed on IDEAS
    15. Dimelis, Sophia P., 2001. "Inventory investment over the business cycle in the EU and the US," International Journal of Production Economics, Elsevier, vol. 71(1-3), pages 1-8, May.
    16. Robert E. Carpenter & Steven M. Fazzari & Bruce C. Petersen, 1998. "Financing Constraints And Inventory Investment: A Comparative Study With High-Frequency Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 513-519, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chikán, Attila & Kovács, Erzsébet & Matyusz, Zsolt, 2011. "Inventory investment and sectoral characteristics in some OECD countries," International Journal of Production Economics, Elsevier, vol. 133(1), pages 2-11, September.
    2. Sangalli, Ilaria, 2013. "Inventory investment and financial constraints in the Italian manufacturing industry: A panel data GMM approach," Research in Economics, Elsevier, vol. 67(2), pages 157-178.
    3. Guariglia, Alessandra & Mateut, Simona, 2010. "Inventory investment, global engagement, and financial constraints in the UK: Evidence from micro data," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 239-250, March.
    4. Zhiwei Xu & Yi Wen & pengfei Wang, 2012. "When Do Inventories Destabilize the Economy? ---A Tractable Approach to (S,s) Policies," 2012 Meeting Papers 288, Society for Economic Dynamics.
    5. Yi Wen, 2008. "Inventories, liquidity, and the macroeconomy," Working Papers 2008-045, Federal Reserve Bank of St. Louis.
    6. Yi Wen, 2011. "Input and Output Inventory Dynamics," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(4), pages 181-212, October.
    7. Mustafa Caglayan & Sara Maioli & Simona Mateut, 2011. "Inventories and sales uncertainty," Working Papers 2011003, The University of Sheffield, Department of Economics, revised Feb 2011.
    8. Caglayan, Mustafa & Maioli, Sara & Mateut, Simona, 2012. "Inventories, sales uncertainty, and financial strength," Journal of Banking & Finance, Elsevier, vol. 36(9), pages 2512-2521.
    9. Guariglia, Alessandra & Mateut, Simona, 2006. "Credit channel, trade credit channel, and inventory investment: Evidence from a panel of UK firms," Journal of Banking & Finance, Elsevier, vol. 30(10), pages 2835-2856, October.
    10. Caggese, Andrea, 2007. "Financing constraints, irreversibility, and investment dynamics," Journal of Monetary Economics, Elsevier, vol. 54(7), pages 2102-2130, October.
    11. Wen, Yi, 2005. "Understanding the inventory cycle," Journal of Monetary Economics, Elsevier, vol. 52(8), pages 1533-1555, November.
    12. Greenaway, David & Guariglia, Alessandra & Kneller, Richard, 2007. "Financial factors and exporting decisions," Journal of International Economics, Elsevier, vol. 73(2), pages 377-395, November.
    13. Yang, Xiaolou, 2011. "Trade credit versus bank credit: Evidence from corporate inventory financing," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(4), pages 419-434.
    14. Gianni La Cava, 2013. "Inventory Investment in Australia and the Global Financial Crisis," RBA Research Discussion Papers rdp2013-13, Reserve Bank of Australia.
    15. Sebastian Steinker & Mario Pesch & Kai Hoberg, 2016. "Inventory management under financial distress: an empirical analysis," International Journal of Production Research, Taylor & Francis Journals, vol. 54(17), pages 5182-5207, September.
    16. Maccini, Louis J. & Moore, Bartholomew & Schaller, Huntley, 2015. "Inventory behavior with permanent sales shocks," Journal of Economic Dynamics and Control, Elsevier, vol. 53(C), pages 290-313.
    17. Aubhik Khan & Julia K. Thomas, 2007. "Inventories and the Business Cycle: An Equilibrium Analysis of ( S , s ) Policies," American Economic Review, American Economic Association, vol. 97(4), pages 1165-1188, September.
    18. Matteo Iacoviello & Fabio Schiantarelli & Scott Schuh, 2011. "Input And Output Inventories In General Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(4), pages 1179-1213, November.
    19. Paul Mizen & Cihan Yalcin, 2006. "Monetary Policy, Corporate Financial Composition and Real Activity," CESifo Economic Studies, CESifo Group, vol. 52(1), pages 177-213, March.
    20. Jacobo, Juan, 2022. "A multi time-scale theory of economic growth and cycles," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 143-155.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:132:y:2011:i:2:p:174-177. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.