The Cyclical Behavior of Inventories: European Cross-Country Evidence from the Early 1990s Recession
Universita di Torino Working Paper No. 01-53
30 Pages Posted: 17 Jul 2001
Date Written: June 2001
This paper employs data for a panel of firms from France, Italy and the UK to study the effect of the recession of the early '90s on inventory investment, controlling for cyclical fluctuations at the firm level. The results clearly show some common patterns across countries, pointing to the relevance of financial factors in propagating initial recessionary shocks. However, Italian firms, especially if "small and young", seem more likely to suffer from a reduction in the value of collateralizable assets possibly originated by restrictive policy actions.
Keywords: inventory investment, financial accelerator, recessions, panel data
JEL Classification: C23, E22
Suggested Citation: Suggested Citation