On the Cyclical Behaviors of Chinese Inventory Investments
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| Title | On the Cyclical Behaviors of Chinese Inventory Investments
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| Author | Xu Zhiwei , Che Dawei and Xue Hexiang |
| Organization | xuzhiwei09@gmail.com |
| Email | WP208 |
| Key Words | Inventory Cycle; Chinese Business Cycle; Inventory Investment; Purchasing Manager Index; Bayesian Estimation |
| Abstract | Chinese macroeconomic data shows that the inventory investment plays an important role in explaining output volatility. Using PMI dataset, we further investigate inventory investments for both final goods and material goods. We find that the former series are weak counter-cyclical, while the latter is strong pro-cyclical. We then construct a dynamic model with both types of inventories. After conducting dynamic Bayesian estimation, we find that: (1) the model can explain empirical findings quite well, and (2) fluctuations of inventory investments are mainly caused by the demand shock. |
| Serial Number | |
| Time | 2012-02-15 |
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