Modified Version: Buffer Role of Inventories and Unfilled Orders

  • Peter Stalder
Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 360)


According to the firm level model, goods demand yd acts as a potential constraint on output and — if smaller than \({{\tilde{y}}^{s}} \) — spills over onto labor demand. Such immediate rationing and spillover effects, captured in the aggregate model by the PG-terms, may seem somewhat unrealistic in a quarterly model because firms should be expected to smooth production in relation to current demand, using output inventories and unfilled orders as buffer stocks. It has been argued, e.g. by Blinder (1980, 1981), that this kind of behavior calls in question the min-condition: output y can be temporarily larger than current demand yd, and y < yd does not necessarily mean that demand gets rationed.


Aggregate Demand Micro Model Output Inventory Current Demand Buffer Stock 
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Copyright information

© Springer-Verlag Berlin Heidelberg 1991

Authors and Affiliations

  • Peter Stalder
    • 1
  1. 1.Konjunkturforschungsstelle KOF-ETHEidgenössischen Technischen Hochschule ZürichZürichSwitzerland

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