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Mr. Willy A Hoffmaister and Mr. Jens R Clausen
In the United States and a few European countries, inventory behavior is mainly the outcome of demand shocks: a standard buffer-stock model best characterizes these economies. But most European countries are described by a modified buffer-stock model where supply shocks dominate. In contrast to the United States, inventories boost growth with a one-year lag in Europe. Moreover, inventories provide limited information to improve growth forecasts particularly when a modified buffer-stock model characterizes inventory behavior.
Mr. Willy A Hoffmaister and Mr. Jens R Clausen

inventories provide useful information. What this suggests is that the beneficial effect of inventories stems from estimating the dynamics of output growth—an essential part of accurate forecasting—but the volatility of inventories detracts from output growth forecasts. R eferences Agresti , Anna María , and Benoît Mojon , 2001 , “ Some stylized facts on the euro area business cycle ,” in Monetary Policy Transmission in the Euro Area ( eds. Angeloni , Ignazio , Anil Kasyap , and Benoît Mojon ) , Cambridge University Press , pp. 15 – 35

International Monetary Fund

played an important role. Available data on supply developments point to an unusually large buildup of commodity inventories stemming from the largest back-to-back yearly increases in production in at least the past 25 years. Further confirmation of the importance of supply factors is provided by the observation that the largest price declines were registered in those commodities where supply increases were the largest (such as agricultural crops) and the least where the supply situation tended to tighten (such as metals). An underlying factor that has contributed to