The Roles of Inventories Investigated in a Factor Demand Model

Revue Economique, Vol. 49, No. 5, pp. 1345-1364, 1998

21 Pages Posted: 12 Jun 2011

Date Written: February 9, 1998

Abstract

An ECM is derived from first order conditions of a factor demand model. The role of inventory stock in the long run, i.e. a precautionary measure (according to Holt, Modigliani, Muth and Simon (1960)), and/or the role as a production factor (Kydland and Prescott (1982), Christiano (1988)) are investigated. French data from five industrial sectors (1970.I-1992.IV) are used for the analyses. The results indicate that neither the role as a precautionary measure nor the role of a production factor is rejected.

Keywords: factor demand, inventories, production factor

JEL Classification: C32, D21, D24

Suggested Citation

Peeters, Marga, The Roles of Inventories Investigated in a Factor Demand Model (February 9, 1998). Revue Economique, Vol. 49, No. 5, pp. 1345-1364, 1998, Available at SSRN: https://ssrn.com/abstract=1861221

Marga Peeters (Contact Author)

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

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