Evaluating the German Inventory Cycle Using Data from the Ifo Business Survey

48 Pages Posted: 8 Jun 2016

See all articles by Thomas Knetsch

Thomas Knetsch

Deutsche Bundesbank - Economics Department

Multiple version iconThere are 2 versions of this paper

Date Written: 2004

Abstract

Inventory fluctuations are an important phenomenon in business cycles. However, the preliminary data on inventory investment as published in the German national accounts are tremendously prone to revision and therefore ill-equipped to diagnose the current stance of the inventory cycle. The Ifo business survey contains information on the assessments of inventory stocks in manufacturing as well as in retail andwholesale trade. Static factor analysis anda methodbuild ing on canonical correlations are appliedto construct a composite index of inventory fluctuations. Based on recursive estimates, the different variants are assessedas regards the stability of the weighting schemes andthe ability to forecast the "true" inventory fluctuations better than the preliminary official releases.

Keywords: inventory investment, revisions, composite indices, canonical correlation, factor models, national accounts data, Ifo business survey, Germany

JEL Classification: E22, C32, C52

Suggested Citation

Knetsch, Thomas, Evaluating the German Inventory Cycle Using Data from the Ifo Business Survey (2004). Bundesbank Series 1 Discussion Paper No. 2004,10, Available at SSRN: https://ssrn.com/abstract=2785055 or http://dx.doi.org/10.2139/ssrn.2785055

Thomas Knetsch (Contact Author)

Deutsche Bundesbank - Economics Department ( email )

Wilhelm-Epstein-Strasse 14
60431 Frankfurt am Main
Germany

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