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Ramdom Walk Behavior of Finished Goods Inventory Investment : Some Theoretical and Empirical Considerations

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  • Claude Montmarquette

Abstract

[eng] Random walk behavior of finished goods inventory investment : some theoretical and empirical considerations. . This paper applies the ARIMA models to the study of finished goods inventories. A theoretical model is developed that covers the different motives for holding inventories and leads to an ARIMA representation. The empirical results of the paper, wich use disaggregated Canadian manufacturing data at the monthly level suggest that a random walk model of finished goods inventory investment is in accord with the data sample, particularly for the non durable industries. These results confirm the difficulties of predicting inventors behavior and stress the usefulness of attempting to link policy variables and inventory holdings. In a final section, the paper speculates on the failure of the more traditional models of inventory holdings to produce this random walk result. [fre] L'article applique les modèles statistiques ARIMA à l'étude du comportement des investissements d'inventaire de produits finis des industries (10) manufac­turières canadiennes. Un modèle théorique qui recouvre les motifs traditionnels de détenir des inventaires est développé à cette fin. Les résultats empiriques de l'étude suggèrent un modèle de marche aléatoire (random walk) pour expliquer les investissements d'inventaire, ce dernier résultat étant particulièrement vérifié pour les industries du secteur des biens non-durables. Les résultats em­piriques de l'étude confirment ainsi les difficultés connues de prédire correcte­ment le comportement des investissements d'inventaire et soulignent également l'impossibilité de relier ce comportement à des variables de politiques économiques de stabilisation. Pour terminer, le texte discute du modèle de marche aléatoire en termes des modèles traditionnellement appliqués aux investissements d'inventaire, et tente d'expliquer pourquoi ce type de résultat n'a pu être observé par les modèles traditionnels.

Suggested Citation

  • Claude Montmarquette, 1977. "Ramdom Walk Behavior of Finished Goods Inventory Investment : Some Theoretical and Empirical Considerations," Revue Économique, Programme National Persée, vol. 28(3), pages 352-375.
    • Handle: RePEc:prs:reveco:reco_0035-2764_1977_num_28_3_408327
    DOI: 10.3406/reco.1977.408327
    Note: DOI:10.3406/reco.1977.408327
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    References listed on IDEAS

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    1. Moheb Ghali, 1974. "Inventories, Production Smoothing, and the Accelerator: Some Empirical Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 88(1), pages 149-157.
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    3. Ruth P. Mack, 1957. "Characteristics of Inventory Investment: The Aggregate and Its Parts," NBER Chapters, in: Problems of Capital Formation: Concepts, Measurement, and Controlling Factors, pages 471-493, National Bureau of Economic Research, Inc.
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    5. Cooper, J Phillip & Nelson, Charles R, 1975. "The Ex Ante Prediction Performance of the St. Louis and FRB-MIT-PENN Econometric Models and Some Results on Composite Predictors," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 7(1), pages 1-32, February.
    6. Gordon, Robert J, 1970. "The Brookings Model in Action: A Review Article," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 489-525, May-June.
    7. Anderson, W H Locke, 1970. "Production Scheduling, Intermediate Goods, and Labor Productivity," American Economic Review, American Economic Association, vol. 60(1), pages 153-162, March.
    8. Hay, George A, 1970. "Production, Price, and Inventory Theory," American Economic Review, American Economic Association, vol. 60(4), pages 531-545, September.
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