The massive liquidation of inventories during the 2001 recession contrasts sharply with the more moderate inventory … movements observed in recent decades. While the rundown might be seen as evidence that firms are not managing their inventories … much of the recession, firms were successfully regulating their inventories to avoid a large buildup of excess stock. …

, inventories have fallen far behind rapidly advancing sales. What accounts for the change? Market trends have both reduced the need … for inventories and slowed the response of inventories to shifts in demand. At the same time, the long current expansion …