Research Discussion Paper – RDP 21 Stocks, Expected Sales and Production Flexibility


The aim of this paper is to develop a quarterly equation for the value of the physical change in non-farm stocks. Particular attention is focussed on two areas of concern in the literature on this type of equation: the specification of expected sales; and the interpretation of unplanned investment in stocks.

The paper is in four parts. The theoretical frame-work is presented in section 1 and the notation and sources of data are given in section 2. The empirical results are reported in section 3 and some implications of the results are noted in section 4.