Inventories and the Structure of Macro Models

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The message of this paper can be summed up in two words: inventories matter. They matter empirically, in the sense that inventory developments are of major importance in the propagation of business cycles; and they matter theoretically, in the sense that recognition of their existence changes the structure of a variety of theoretical macromodels in some fairly important ways. This paper is mainly about the implications of inventories for the structure of theoretical macro models, but I begin by demonstrating the empirical importance of inventories in business fluctuations

Published: Blinder, Alan. "Inventories and the Structure of Macro Models." The American Economic Review, Vol. 71, No. 2, (May 1981), pp. 11-16.

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