When empirical stock-adjustment models of manufacturers' inventories of finished goods are estimated, there appear to be two local minima in the sum of squared residuals functions. At one local minimum, the estimated adjustment speed is typically quite high; at the other, it is typically quite...

The production smoothing model of inventory behavior has a long and venerable history, and theoretical foundations which seem very strong. Yet certain overwhelming facts seem not only to defy explanation within the production smoothing framework, but actually to argue that the basic idea of...

An otherwise conventional Keynesian macro model is modified to include inventories of final goods by (1) drawing a distinction between production and final sales, and (2) allowing for a negative effect of the level of inventories on production. Two models are presented: one in which the labor...