Inventory investment and the Australian business cycle : empirical findings 1959:3-2001:1

Cavenagh, Jonathan. (2001). Inventory investment and the Australian business cycle : empirical findings 1959:3-2001:1 Honours Thesis, School of Economics, University of Queensland.

       
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Author Cavenagh, Jonathan.
Thesis Title Inventory investment and the Australian business cycle : empirical findings 1959:3-2001:1
School, Centre or Institute School of Economics
Institution University of Queensland
Publication date 2001
Thesis type Honours Thesis
Total pages 98
Language eng
Subjects 14 Economics
Formatted abstract
The importance of inventory investment in United States cyclical fluctuations is long established. Work by Abramovitz (1950) showed that inventory investment accounted for a large share of the decline in output during pre-war recessions in the U.S., Blinder and Maccini (1991) showed that this pattern continued in the post-war period and concluded that the inventory accelerator created cycles that otherwise might not have existed.

There are a number of ways to examine the role of inventory investment in business cycles. These approaches can be distinguished by which component of the business cycle they examine in relation to inventory investment. Employing measures that investigate the role of inventories in different phases of the business cycle can deepen the understanding of the inventory investment business cycle relationship.

This thesis measures the role of inventory investment in Australian business cycles in three ways. The first concentrates on the importance of inventory investment in the downturn and recovery phases of the business cycle. The second gives a more rigorous account of the influence of inventory investment in the recovery phase, through investigating the phase structure of the Australian business cycle and the role of inventory investment in this phase structure. The third tests for a multicointegrating relationship between production and sales, linked through inventory investment.

Overall, the results suggest that inventory investment has played an important role in Australian cyclical fluctuations. Evidence is presented that inventory investment can explain a three-phase structure to the Australian business cycle. Some evidence is also found of a multicointegrating relationship between production and sales.

 
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Created: Tue, 23 Nov 2010, 13:07:46 EST by Muhammad Noman Ali on behalf of The University of Queensland Library