This paper introduces inventories in an otherwise standard dynamic stochastic general equilibrium model. Firms … accumulate inventories to facilitate sales, but face a cost of doing so in terms of costly storage of intermediate goods. Based … inventory dynamics has a significant impact on parameter estimates and the following analyses. We find that inventories enter …

materials, for both production as well as for inventories. The more detailed treatment of inventory holdings offers new insights …

inventories react strongly and positively to news about future increases in total factor productivity. Theory suggests that the … transmission channel of news shocks to inventories works through movements in marginal costs, through movements in sales, or …