individuals and households. -- Great Moderation ; inventories ; monetary policy ; volatility …We review evidence on the Great Moderation together with evidence about volatility trends at the micro level to develop … a potential explanation for the decline in aggregate volatility since the 1980s and its consequences. The key elements …

materials, for both production as well as for inventories. The more detailed treatment of inventory holdings offers new insights … and they explain the volatility of many variables. We reject the hypothesis of better inventory management and improved …

"We review evidence on the Great Moderation in conjunction with evidence about volatility trends at the micro level. We … combine the two types of evidence to develop a tentative story for important components of the aggregate volatility decline … and its consequences. The key ingredients are declines in firm-level volatility and aggregate volatility -- most …

decreases output volatility relative to sales volatility, lower levels of inventories actually increases sales volatility … 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 expected demand. We also show that the inventory to sales ratio is both …