Inventories in the Keynesian Macro Model / Alan S. Blinder.

Format:

Book

Author/Creator:

Blinder, Alan S.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w0460.

NBER working paper series no. w0460

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1980.

Summary:

An otherwise conventional Keynesian macro model is modified to include inventories of final goods by (1) drawing a distinction between production and final sales, and (2) allowing for a negative effect of the level of inventories on production. Two models are presented: one in which the labor market clears and one in which it does not. Both models are stable only if the negative effect of inventories on production is "large enough." Both models also imply that real wages move counter cyclically -- in direct contrast to the usual implication of Keynesian models. Detailed analysis of the market-clearing model show that there should be negative correlation between the levels of inventories and output, and between changes in inventories and changes in output, over the business cycle. However, inventory change should be positively correlated with the level of output.

Notes:

Print version record

February 1980.