Inventories and the Role of Goods-Market Frictions for Business Cycles by Wouter den Haan

Join us for this weeks Macroeconomics Research Seminar, Spring Term 2023.

Professor Wouter den Haan from University College London will present this weeks Macroeconomics seminar on Inventories and the Role of Goods-Market Frictions for Business Cycles.

Abstract

Changes in inventories investment are quantitatively important for fluctuations in aggregate output. Matching explaining business cycle facts has turned out to be challenging and inventory investment is typically not present in modern business cycle models. We show that by introducing goods-market frictions into a New Keynesian business cycle model we can replicate observed cyclical behavior of inventories in response to a variety of shocks. Specifically, inventories are procyclical, output is more volatile than sales, and the inventory-sales ratio is countercyclical. The latter implies that “goods-market efficiency” is procyclical.

This seminar will be held on campus in the Economics Common Room at 4pm on Tuesday 14 March. This event is open to all levels of study and is also open to the public. To register your place, please contact the seminar organisers.

This event is part of the Macroeconomics Research Seminar Series.