Credit conditions and the cyclical behavior of inventories : a case study of the 1981-82 recession / Anil K. Kashyap, Owen A. Lamont, Jeremy C. Stein.

• This paper examines micro data on U.S. firms' inventories during different macroeconomic episodes. Much of the analysis focuses on the 1981-82 recession, a recession that was apparently precipitated by tight monetary policy. We find important cross-sectional effects in this period: firms that were "bank-dependent" were much more prone to shed inventories than their non-bank-dependent counterparts. In contrast, such cross-sectional differences are largely absent during a period of "loose" monetary policy later in the 1980s. Our findings are consistent with the view that 1) there is a bank lending channel of monetary policy transmission; 2) the lending channel is likely to be particularly important in explaining inventory fluctuations during downturns.

Subject headings

Inventories  -- United States -- Mathematical models (LCSH)

Credit  -- United States (LCSH)

Recessions  -- United States (LCSH)

Publication and Content Type

339 (DDC)

Qaa (kssb/8 (machine generated))