Inventories and Business Cycles, with Special Reference to Manufacturers' Inventories
Long neglected in speculation about the causes of business cycles, inventory fluctuations must now be accepted as a factor of primary importance. This volume is the report of a comprehensive investigation in which a thorough study of inventory statistics is used to increase our understanding of the forces controlling the state of business. As stated by the author in the Preface: "As nearly as I could, I have tried to discover, by studying statistical records, how inventories have moved during business cycles and what influence they have had on business activity. And so far as possible, the theories about inventory movements and their influence to which the work leads are generalizations of recorded experience."
The book is divided into three parts. The first reviews the literature of the subject and describes the statistical materials and methods to be employed. Part Two is a study of cycles in the volume of inventories held by business. It finds that inventories respond only very slowly to changes in business activity and traces the long lag to the commercial and technical obstacles that prevent business firms from quickly adjusting certain classes of inventory holdings to changes in requirements. Part Three investigates the connection between the pace of inventory accumulation and liquidation and the state of business. It finds that inventory accumulation and business activity tend to reach peak (and trough) levels at about the same time and that a large fraction of the changes in total output during American business cycles has taken the form of changes in the volume of output devoted to building up stocks. Successive chapters study the causes of the timing and magnitude of the fluctuations in inventory accumulation and their significance for the size, duration, and intensity of business cycles.
This study is the fourth volume in the series of Studies in Business Cycles in which the National Bureau of Economic Research is making known the results of its systematic exploration of the causes of prosperity and depression.