Khan, Aubhik; Thomas, Julia K. - Federal Reserve Bank of Minneapolis - 2004
We evaluate two leading models of aggregate fluctuations with inventories in general equilibrium: the (S,s) model and … the stockout avoidance model. Each is judged by its ability to explain the observed magnitude of inventories in the U … correlation with sales. We find that the (S,s) model is far more consistent with the behavior of aggregate inventories in the …