Economic Review

1992

 
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Jan/Feb, 1992

Evidence of Improved Inventory Control

Dan M. Bechter and Stephen Stanley

Inventory data applied to a standard partial stock-adjustment model demonstrate that inventory control, defined by desired marginal inventory-sales ratios and speeds of adjustment, improved in the last decade or so, particularly in the manufacturing sector. In addition, the evidence suggests that, contrary to popular wisdom, the net effect of these changes in inventory control has been to increase the volatility of inventory investment in both the manufacturing and trade sectors.

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