search query: @indexterm BUSINESS CYCLES / total: 529
reference: 211 / 529
| Author: | Naish, H. F. |
| Title: | The linear quadratic inventory model as a micro foundation for Keynesian theories of the business cycle |
| Journal: | Journal of Economic Behavior and Organization
1998 : JUL, VOL. 36:1, p. 39-57 |
| Index terms: | BUSINESS CYCLES ECONOMIC THEORY LINEAR MODELS |
| Freeterms: | LINEAR QUADRATIC MODEL INVENTORY MODEL DEMAND SHOCKS |
| Language: | eng |
| Abstract: | Aggregate inventory investment is invariably procyclical which suggests that inventories play a destabilizing role in the economy as predicted by early Keynesian models of the business cycle. This behavior is believed to be inconsistent with the linear quadratic model, the most prominent micro theory of inventories. But, the linear quadratic model, when placed in a simple macro framework, can account for the procyclical behavior of inventory investment, even when the only shocks are independent demand shocks, inventory targets are independent of sales and individual firms adjust inventories slowly towards their target levels. |
SCIMA