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A STUDY OF AUTOMOBILE INVENTORY INVESTMENT
Author(s) -
IRVINE F. OWEN
Publication year - 1981
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1981.tb00322.x
Subject(s) - inventory investment , economics , perpetual inventory , stock (firearms) , econometrics , capital investment , inventory turnover , investment (military) , inventory cost , carrying cost , operations management , inventory management , business , inventory theory , total cost , finance , microeconomics , stock exchange , engineering , supply chain , mechanical engineering , marketing , politics , law , political science
The volatile fluctuations in automobile inventory levels are explained well by the stock‐adjustment model estimated in this paper on monthly time‐series data. In contrast to the findings of most previous inventory studies, fluctuations in financial inventory carrying costs (as measured by a service cost of capital) are found to influence the target auto stocks in both a statistically significant and economically important manner. Also, the speed‐of‐adjustment of automobile inventories to their target level is estimated to be relatively fast, about thirty percent per month.