{"title":"Production and inventory behavior of capital","authors":"Y. Wen","doi":"10.20955/WP.2005.044","DOIUrl":null,"url":null,"abstract":"This paper provides a dynamic optimization model of durable good inventories to study the interactions between investment demand and production of capital goods. There are three major findings: First, capital suppliers' inventory behavior makes investment demand more volatile in equilibrium; Second, equilibrium price of capital is characterized by downward stickiness; Third, the responses of the capital market to interest rate and other environmental changes are asymmetric. All are the results of equilibrium interactions between demand and supply.","PeriodicalId":45810,"journal":{"name":"Annals of Economics and Finance","volume":"8 1","pages":"95-112"},"PeriodicalIF":0.2000,"publicationDate":"2005-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Annals of Economics and Finance","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.20955/WP.2005.044","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q4","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
This paper provides a dynamic optimization model of durable good inventories to study the interactions between investment demand and production of capital goods. There are three major findings: First, capital suppliers' inventory behavior makes investment demand more volatile in equilibrium; Second, equilibrium price of capital is characterized by downward stickiness; Third, the responses of the capital market to interest rate and other environmental changes are asymmetric. All are the results of equilibrium interactions between demand and supply.
期刊介绍：
Annals of Economics and Finance (ISSN 1529-7373) sets the highest research standard for economics and finance in China. It publishes original theoretical and applied papers in all fields of economics, finance, and management. It also encourages an economic approach to political science, sociology, psychology, ethics, and history.
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