We study the implications of a stockout constraint in a dynamic general equilibrium model, which can explain both RBC and inventory facts well. Under the stockout constraint, inventories and demand are complements in generating sales, and hence the optimal level of inventories increases in...

Time-to-build, time-to-produce, and inventory have important implications for asset prices and quantity dynamics in a general equilibrium model with recursive preferences. Time-to-build captures the delay in transforming new investments into productive capital, and time-to-produce captures the...

Firms have very different inventory levels. How much of this heterogeneity is due to differences among firms, versus among industries? Using all observations in COMPUSTAT for 1950 through 2004, we find that both industry and firm effects are significant. Further, firm effects are as strong as,...

As well as investing in capital, firms invest in inventories or stocks. For some businesses, investing in. Shops are better able to attract consumers if their shelves are full and they can offer a wide variety of products. Manufacturers are more likely to win contracts if their customers can...

We review and interpret recent work on inventories, emphasizing empirical and business cycle aspects. We begin by documenting two empirical regularities about inventories. The first is the well-known one that inventories move procyclically. The second is that inventory movements are quite...