Seasonal Cycles, Business Cycles, and the Comovement of Inventory Investment and Output

Journal of Money, Credit and Banking, Vol. 30, No. 3, Part 1, August 1998

Posted: 28 Jul 1998

See all articles by Robert E. Carpenter

Robert E. Carpenter

University of Maryland, Baltimore County (UMBC) - Department of Economics; Federal Reserve Banks - Federal Reserve Bank of Richmond

Daniel Levy

Bar-Ilan University - Department of Economics; Emory University - Department of Economics; Rimini Center for Economic Analysis

Abstract

The importance of inventory investment in the business cycle is well known. Its role in the seasonal cycle is less well known. We examine the variation of inventory investment and its comovement with output over the seasonal and business cycles. We measure the deterministic and stochastic seasonal components of monthly disaggregated inventory data and find seasonality contributes about 75 percent of the total variance, similar to the proportion found in GDP. We find that inventory investment and output exhibit high correlation, with similar magnitudes, at seasonal and business cycle frequencies. These findings are consistent with the idea that seasonal cycles and business cycles are propagated through similar mechanisms and suggest that inventory investment may play as important a role in the seasonal cycle as it does in the business cycle.

JEL Classification: E22, E32, C22

Suggested Citation

Carpenter, Robert E. and Levy, Daniel, Seasonal Cycles, Business Cycles, and the Comovement of Inventory Investment and Output. Journal of Money, Credit and Banking, Vol. 30, No. 3, Part 1, August 1998, Available at SSRN: https://ssrn.com/abstract=108648

Robert E. Carpenter (Contact Author)

University of Maryland, Baltimore County (UMBC) - Department of Economics ( email )

1000 Hilltop Circle
Baltimore, MD 21250
United States
410-455-6590 (Phone)
410-455-1054 (Fax)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

Daniel Levy

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 5290002
Israel
+972 3 531-8345 (Phone)
+972 3 738-4034 (Fax)

HOME PAGE: http://econ.biu.ac.il/en/levy

Emory University - Department of Economics ( email )

1602 Fishburne Drive, Suite 306
Rich Building
Atlanta, GA 30322-0001
United States

HOME PAGE: http://economics.emory.edu/home/people/faculty/Levydaniel.html

Rimini Center for Economic Analysis ( email )

Wilfrid Laurier University
75 University Ave W.
Waterloo, Ontario N2L3C5
Canada

HOME PAGE: http://rcea.org/

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