Observation errors and inventory cycles

Michael Reiter

Research output: Contribution to journalArticlepeer-review


This paper presents a very small macroeconomic model which can explain the stylized facts concerning the cyclical properties of fixed and inventory investment, and applies it to detrented data of Germany, USA and UK. The model is formulated in continuous time. Its central conceptual tool is the Second Order Accelerator of investment and production. The new aspect of this paper is that the stochastic formulation of the inventory equation incorporates errors in the variables as well as errors in the equations.

Original languageEnglish (US)
Pages (from-to)99-105
Number of pages7
JournalInternational Journal of Production Economics
Issue number1-3
StatePublished - Feb 1992

ASJC Scopus subject areas

  • General Business, Management and Accounting
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering


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