RDP 9306: Inventories and the Business Cycle Appendix 2: Alternative Regression Results

Darren Flood and Philip Lowe

June 1993

The tables in this appendix present similar results to those presented in Tables 8 and 9. The results in Tables A1 and A2 use the second quarter of 1982 as the break point in the sample. This quarter corresponds to be beginning of the period in which the stocks to sales ratio declines (see Graph 2). Tables A3 and A4 use the new sub-samples and include a time trend in the regressions.

Table A1: Explaining Unexpected Changes in Inventories Dependent Variable: Inventory Shock
Finished Goods Raw Materials
66:3–82:2 82:3–92:3 66:3–82:2 82:3–92:3
Constant 10.06
(5.46)		 6.11
(2.89)		 12.94
(5.25)		 7.06
(2.20)
Demand Shock*D1
(favourable)		 −0.97
(9.63)		 0.22
(1.58)		 −0.41
(2.71)		 0.53
(2.71)
Demand Shock*D2
(unfavourable)		 −0.20
(1.76)		 −0.02
(0.15)		 0.06
(0.54)		 0.13
(0.69)
Cost Shock −0.30
(1.99)		 0.37
(3.39)		 −0.34
(1.79)		 0.07
(0.36)
Inline Equation 0.47 0.04 0.09 0.07
H0:β1 = β2 (p-value) 0.00 0.27 0.03 0.23
Table A2: Explaining Expected Changes in Inventories Dependent Variable: Expected Inventories
Finished Goods Raw Materials
66:3–82:2 82:3–92:3 66:3–82:2 82:3–92:3
Constant −6.45
(4.37)		 −8.09
(3.89)		 −12.07
(4.83)		 −12.20
(6.87)
Expected Demand*D1
(favourable)		 0.22
(4.47)		 −0.06
(0.74)		 0.35
(5.62)		 0.12
(1.02)
Expected Demand*D2
(unfavourable)		 0.12
(1.14)		 0.41
(4.75)		 0.36
(3.01)		 0.44
(5.51)
Expected Change in Costs −0.22
(2.33)		 −0.30
(3.58)		 −0.03
(0.21)		 −0.30
(2.69)
Inline Equation 0.36 0.61 0.54 0.70
H0:β1 = β2 (p-value) 0.46 0.00 0.94 0.03
Note.
1. T-statistics appear in parentheses below coefficient estimates. Standard errors have been calculated using the Newey-West procedure with three lags.
Table A3: Explaining Unexpected Changes in Inventories Dependent Variable: Inventory Shock
Finished Goods Raw Materials
66:3–82:2 82:3–92:3 66:3–82:2 82:3–92:3
Constant 8.45
(1.81)		 20.65
(1.20)		 5.76
(1.02)		 14.01
(0.62)
Demand Shock*D1
(favourable)		 −0.96
(9.02)		 0.21
(1.33)		 −0.38
(2.54)		 0.53
(2.43)
Demand Shock*D2
(unfavourable)		 −0.19
(1.73)		 −0.06
(0.46)		 0.09
(0.90)		 0.11
(0.65)
Cost Shock −0.27
(1.42)		 0.41
(3.25)		 −0.19
(0.79)		 0.09
(0.47)
Time Trend 0.02
(0.47)		 −0.13
(0.85)		 0.10
(1.65)		 −0.06
(0.33)
Inline Equation 0.46 0.05 0.11 0.05
H0:β1 = β2 (p-value) 0.00 0.27 0.02 0.20
Table A4: Explaining Expected Changes in Inventories Dependent Variable: Expected Inventories
Finished Goods Raw Materials
66:3–82:2 82:3–92:3 66:3–82:2 82:3–92:3
Constant 5.38
(1.45)		 24.37
(3.27)		 −2.43
(0.37)		 20.50
(2.89)
Expected Demand*D1
(favourable)		 0.16
(3.15)		 −0.12
(1.85)		 0.30
(4.28)		 0.07
(0.82)
Expected Demand*D2
(unfavourable)		 0.09
(1.21)		 0.40
(7.41)		 0.34
(3.40)		 0.43
(7.78)
Expected Change in Costs −0.44
(4.37)		 −0.41
(3.52)		 −0.21
(1.26)		 −0.40
(3.69)
Time Trend −0.12
(3.15)		 −0.27
(4.46)		 −0.10
(1.59)		 −0.27
(4.45)
Inline Equation 0.45 0.74 0.56 0.80
H0:β1 = β2 (p-value) 0.56 0.00 0.78 0.00
Note.
1. T-statistics appear in parentheses below coefficient estimates. Standard errors have been calculated using the Newey-West procedure with three lags.