What drives inventory accumulation?: News on rates of return and marginal costs

Christoph Gortz; Christopher Gunn; Thomas Lubik

doi:10.1111/jmcb.13197

What drives inventory accumulation? News on rates of return and marginal costs

Christoph Gortz, Christopher Gunn^*, Thomas Lubik

^*Corresponding author for this work

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

We study the determinants of inventory accumulation in a structural vector autoregression (VAR) framework with news shocks. Specifically, we investigate how news shocks affect two key determinants of inventory movements, namely, rates of return and marginal costs. We establish that inventories react strongly and positively to news about future increases in total factor productivity. We provide evidence that changes in external and internal rates of return are central to the transmission for such news shocks. We do not find evidence for a dominant role of marginal costs.

Original language	English
Journal	Journal of Money, Credit and Banking
Early online date	17 Jul 2024
DOIs	https://doi.org/10.1111/jmcb.13197
Publication status	E-pub ahead of print - 17 Jul 2024

Keywords

Structural VAR
Cost of Capital
News Shocks
Inventories

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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Cite this

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