The uncertain and sequential trading (UST) model of inventories behavior with iid shocks predicts that (a) the … beginning of period inventories is a sufficient statistic for past variables and (b) an increase in the beginning of period … inventories reduces output, employment, hours per employee, and effort. I find empirical support for the second hypothesis but not …

We examine the role of inventories and capacity utilization (of both capital and labor) for the propagation of business … cycle fluctuations. We document a new set of facts regarding the U.S. cyclical regularities of inventories and capacity … comove with the holdings of inventories. Second, we find that labor utilization is procyclical as well, but is weakly …