This paper presents empirical evidence against the standard dichotomy in macroeconomics that separates growth from the volatility of economic fluctuations. In a sample of ninety-two countries as well as a sample of OECD countries, the authors find that countries with higher volatility have lower...

This paper presents a theory of inventory investment by stage-of-processing, and uses it to examine the role of inventory investment in economic fluctuations. The model, in which inventories are treated as factors of production, is estimated for four durable goods industries. Three conclusions...