Credit Conditions and the Cyclical Behavior of Inventories: A Case Studyof the 1981-82 Recession
Year: 1992
Type: report
Abstract: 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.
DOI: 10.3386/w4211
Authors: Anil Kashyap, Owen Lamont, Jeremy Stein
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2108464800