46 Pages Posted: 24 Jan 2007 Last revised: 19 Jul 2010
Date Written: November 1992
This paper examines micro data on U.S. firms' inventories during different macroeconomic episodes. Much of the analysis focuses on the 1981-82 recession, a recession that was apparently precipitated by tight monetary policy. We find important cross-sectional effects in this period: firms that were "bank-dependent" were much more prone to shed inventories than their non-bank-dependent counterparts. In contrast, such cross-sectional differences are largely absent during a period of "loose" monetary policy later in the 1980s. Our findings are consistent with the view that 1) there is a bank lending channel of monetary policy transmission; 2) the lending channel is likely to be particularly important in explaining inventory fluctuations during downturns.
Suggested Citation: Suggested Citation
Kashyap, Anil K. and Lamont, Owen A. and Stein, Jeremy C., Credit Conditions and the Cyclical Behavior of Inventories: A Case Studyof the 1981-82 Recession (November 1992). NBER Working Paper No. w4211. Available at SSRN: https://ssrn.com/abstract=480214
By Ben Bernanke