TY  - JOUR
AU  - Blinder,Alan S.
TI  - More on the Speed of Adjustment in Inventory Models
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1913
PY  - 1986
Y2  - December 1986
UR  - http://www.nber.org/papers/w1913
L1  - http://www.nber.org/papers/w1913.pdf
N1  - Author contact info:
Alan S. Blinder
Department of Economics
Princeton University
Princeton, NJ 08544-1021
Tel: 609/258-3358
Fax: 609/258-5398
E-Mail: blinder@princeton.edu
AB  - When empirical stock-adjustment models of manufacturers' inventories of finished goods are estimated, there appear to be two local minima in the sum of squared residuals functions. At one local minimum, the estimated adjustment speed is typically quite high; at the other, it is typically quite low. Furthermore, finding two sets of estimates that fit the data almost equally well does not appear to be a quirk of this particular application. Rather, it stems from a fundamental identification problem that afflicts partial adjustment models of all kinds. In the specific context of manufacturers' inventories of finished goods, the estimation procedure employed by Maccini and Rossana seems to pick out the solution with rapid adjustment (and high serial correlation in the disturbances) whereas the solution with slow adjustment (and little serial correlation) is more often the global minimum.
ER  -