Inventories in national economies : a cross-country analysis of macroeconomic data

This book introduces a new approach in the field of macroeconomic inventory studies: the use of multivariate statistics to evaluate long-term characteristics of inventory investments in developed countries. By analyzing a 44-year period series of annual inventory change in percentage of GDP in a set of OECD countries, disclosing their relationship to growth, industry structure and alternative uses of GDP (fixed capital investments, foreign trade and consumption), it fills a gap in the economic literature. It is generally accepted that inventories play an important role in all levels of the economy. However, while there is extensive literature on micro- (and even item-) level inventory problems, macroeconomic inventory studies are scarce. Both the long-term processes of inventory formation and their correlation with other macroeconomic factors provide interesting conclusions about economic changes and policies in our immediate past, and present important insights for the future. Preface 5 Subject 5 Structure 6 Focuses and Takeaway 7 Acknowledgements 9 Contents 10 1 Introduction: The Nature and Structure of the Inventory Problem 14 1.1 Definition of Inventories 14 1.2 Reasons for Inventory Holding 15 1.3 Inventories in the Economy: A Holistic View 17 1.3.1 The Item-Level Inventory Problem 18 1.3.2 Inventories at the Firm Level: Inventory Management 19 1.3.3 National Inventories 20 1.4 Focuses of Macroeconomic Inventory Analysis: Level, Structure and Fluctuation 21 1.4.1 Inventory Level 21 1.4.2 Inventory Structure 22 1.4.3 Inventory Fluctuations 23 1.5 Macroeconomic Inventory Trends 23 References 25 2 Review of the Literature 26 2.1 Introduction 26 2.2 Analysis of Inventories at the Firm Level 27 2.2.1 Models of Inventory Behaviour of the Firms in General: Theories and Empirics 28 2.2.2 Special Issues in Firm–Inventory Relations 32 2.2.2.1 Firm Characteristics and Inventories 32 2.2.2.2 Inventories and Finances 33 2.2.2.3 Inventories and Profitability at the Firm Level 34 2.2.2.4 Impact of Better Inventory Management 36 2.2.2.5 Other Studies on Firm-Level Inventories 37 2.2.2.6 Conclusion 38 2.3 Consumer Inventories 38 2.4 Inventory Analysis at the Sector or Industry Level 39 2.5 Inventory Analysis at the Macrolevel 42 2.5.1 Inventory Cycles, Inventories and Business Cycles 42 2.5.2 Macromodels and Inventories 45 2.5.3 Connection of Inventories and Other Macrovariables 47 2.5.3.1 Inventories and Macrofinances 47 2.5.3.2 Inventories, Foreign Trade, Infrastructure: Evidence from Various Countries 49 2.5.4 Inventory Trends and Global Processes 50 2.5.4.1 Long-Term Decreasing Inventory Investment Trend? 50 2.5.4.2 Inventories as a Cause for the Great Moderation 53 2.5.4.3 Inventories and the Global Crisis of 2008–2011 57 2.5.4.4 Summary 58 2.5.5 Macroinventories in Individual Countries 58 2.5.5.1 Inventories in the US Economy 59 2.5.5.2 Macroinventories in Other Countries 61 2.5.6 Inventory Behaviour in International Comparison 62 2.5.6.1 Comparisons of Inventories in Developed Countries 62 2.5.6.2 Direct Antecedents to Our Research 64 2.6 Inventories in the Socialist or Planned Economy and in Transition from the Planned to Market Economy 66 2.7 Measurement, Data Problems and Methodology 68 References 74 3 Methodology 86 3.1 Country and Data Selection 86 3.1.1 Choosing the Data Source 86 3.1.2 Specifying the Proper Time Horizon and the Set of Countries 87 3.1.3 Sub-samples (Country-Wise and Temporal) 88 3.1.4 Variables in the Analysis 89 3.1.5 Missing Data 91 3.2 Statistical Methodology 91 Appendix 94 References 95 4 Analysis of Inventory Behaviour of OECD Countries 97 4.1 Introduction 97 4.2 Aggregate Inventory Behaviour (1970–2013) 97 4.2.1 Aggregate Behaviour of Mean of dI/GDP of 20 TMEs 97 4.2.2 Aggregate Behaviour of Standard Deviation of dI/GDP of 20 TMEs 100 4.2.3 Aggregate Inventory Behaviour of 20 + 6 + 6 Economies for 1994–2013 103 4.2.4 Country dI/GDP Characteristics 105 4.2.4.1 20 TMEs (1970–2013) 105 4.2.4.2 6 TMEs (1994–2013) 108 4.2.4.3 6 PSEs (1994–2013) 110 4.2.4.4 Conclusion 112 4.3 Correlation of dI/GDP and Influencing Factors 113 4.4 Cluster Analysis of 20 TMEs (1970–2013) 115 4.5 Stability of Macroeconomic Indicators: An Entropy-Based Approach 124 4.5.1 Concept of Stability 124 4.5.2 Stability of Macroeconomic Indicators 126 4.5.3 Comparison of Entropies and Coefficient of Variation 129 4.6 Sectoral Analysis of 20 TMEs 132 4.6.1 Overall Sectoral Correlations 132 4.6.2 Cluster Analysis of Sectoral Characteristics 133 4.6.3 Analysis of Cluster 2 Sub-clusters 139 4.6.4 Summary 149 4.7 Inventory Cycles 150 4.7.1 Autoregressive State Space Modelling of Inventory Investment Processes 152 4.7.2 Introduction of Exogenous Variables 155 4.7.3 Convergences 158 4.7.4 The Nature of Inventory Cycles 159 4.7.5 Phase Shift 163 4.7.6 Spectral Dependencies 167 4.7.7 Country-Wise Coherence 171 4.7.8 Summary 171 Appendix to Sect. 4.4 173 Appendix to Sect. 4.6 177 References 178 5 Stability of Macroeconomic Variables 179 5.1 Stability of Macroeconomic Variables of 20 TMEs (1970–2013) 179 5.1.1 Components of GDP Expenditure 180 5.1.2 Other Macroeconomic Indicators 189 5.1.3 Conclusion 205 5.2 Stability of Macroeconomic Variables (6 TMEs + 6 PSEs, 1994–2013) 207 5.2.1 GDP Components 207 5.2.2 Other Macroeconomic Variables 218 Reference 243 6 Inventory Developments in Individual Countries 244 6.1 20 TMEs (1970–2013) 244 6.1.1 Australia 244 6.1.2 Austria 247 6.1.3 Belgium 250 6.1.4 Canada 253 6.1.5 Denmark 255 6.1.6 Finland 257 6.1.7 France 260 6.1.8 Germany 263 6.1.9 Iceland 265 6.1.10 Israel 267 6.1.11 Italy 270 6.1.12 Japan 272 6.1.13 Korea (South) 275 6.1.14 The Netherlands 277 6.1.15 New Zealand 280 6.1.16 Norway 283 6.1.17 Spain 285 6.1.18 Sweden 288 6.1.19 United Kingdom 291 6.1.20 United States 293 6.2 6 + 6 Country Analysis (1994–2013) 297 6.2.1 Country Studies of 6 TMEs 297 6.2.1.1 Chile 297 6.2.1.2 Greece 299 6.2.1.3 Ireland 300 6.2.1.4 Portugal 301 6.2.1.5 Switzerland 303 6.2.1.6 Turkey 304 6.2.2 Country Analysis of six PSEs 305 6.2.2.1 Czech Republic 305 6.2.2.2 Estonia 306 6.2.2.3 Hungary 308 6.2.2.4 Poland 309 6.2.2.5 Slovakia 310 6.2.2.6 Slovenia 311 References 312 7 Summary and Conclusions 316 7.1 Introduction 316 7.2 Review of Literature 316 7.3 Statistical Data and Methodology 317 7.4 Analysis of Inventory Behaviour in 32 OECD Countries 318 7.4.1 Aggregate Inventory Behaviour 318 7.4.2 Correlations 319 7.4.3 Cluster Analysis 320 7.4.4 Stability of Macroeconomic Indicators: An Entropy Based Approach 321 7.4.5 Sectoral Analysis 321 7.4.6 Inventory Cycles 322 7.5 Stability of Macroeconomic Variables 323 7.6 Country Studies 324 7.7 Conclusion 324 Front Matter ....Pages i-xiv Introduction: The Nature and Structure of the Inventory Problem (Attila Chikán, Erzsébet Kovács, Zsolt Matyusz, Magdolna Sass, Péter Vakhal)....Pages 1-12 Review of the Literature (Attila Chikán, Erzsébet Kovács, Zsolt Matyusz, Magdolna Sass, Péter Vakhal)....Pages 13-72 Methodology (Attila Chikán, Erzsébet Kovács, Zsolt Matyusz, Magdolna Sass, Péter Vakhal)....Pages 73-83 Analysis of Inventory Behaviour of OECD Countries (Attila Chikán, Erzsébet Kovács, Zsolt Matyusz, Magdolna Sass, Péter Vakhal)....Pages 85-166 Stability of Macroeconomic Variables (Attila Chikán, Erzsébet Kovács, Zsolt Matyusz, Magdolna Sass, Péter Vakhal)....Pages 167-231 Inventory Developments in Individual Countries (Attila Chikán, Erzsébet Kovács, Zsolt Matyusz, Magdolna Sass, Péter Vakhal)....Pages 233-304 Summary and Conclusions (Attila Chikán, Erzsébet Kovács, Zsolt Matyusz, Magdolna Sass, Péter Vakhal)....Pages 305-314