forecasts in most countries, except in Ireland and at longer forecast horizons in the United Kingdom ( Table A5 ).
IV. F inal R emarks
The “Great Recession” has rekindled the long-standing interest in inventories and the business cycle . In particular, attention has focused on whether the slower pace of destocking or an outright restocking of inventories would be the bellwether of a vigorousinventory-investment led economic recovery as in the past. Could recent improvements in information technology changed the typical recovery profile?
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.