The behavior of manufacturers' inventories: Evidence from US industry level data

Recent empirical research on inventory behavior makes extensive use of disa ggregated data, both from the 20 two-digit manufacturing industries identif ied in the standard industrial classification (SIC) system and physical pro duct data from lower levels of aggregation. Economists have traditionally g rouped these industries by durability of final product or by the presence o r absence of unfilled orders for comparison. Recent research by Mattey and Strongin (Economic Review, Federal Reserve Bank of San Francisco 2 (1997) 3 -17) suggests that production technology affects the flow of material throu gh the production process and the use of labor and capital in manufacturing . A review of the empirical inventory literature reveals patterns that can be explained by differences in production technology in studies that use bo th two-digit industry data and disaggregated physical product data from fou r- and five-digit industries. Thus, there may be more heterogeneity in disa ggregated inventory data than was previously thought. (C) 2001 Elsevier Sci ence B.V. All rights reserved.