{"title":"Policy uncertainty and inventory behavior: Evidence from the US manufacturing sector","authors":"Chun Lu, James Routledge, Kam C. Chan, Tongxia Li","doi":"10.1111/ecpo.12251","DOIUrl":null,"url":null,"abstract":"<p>This study investigates the impact of economic policy uncertainty (EPU) on asymmetric inventory investment (i.e., inventory stickiness or sticky inventory management). Using a sample of 74,912 US firm-year observations over the 1984–2021 period, we observe a significantly negative relationship between EPU and asymmetric inventory investment. Our cross-sectional analyses reveal that managers' pessimistic expectations regarding future demand and higher cost of funding and maintaining capacity are the channels through which EPU affects asymmetric inventory behavior. Moreover, this negative impact is more pronounced for firms that face longer-duration uncertainty, rely heavily on government purchases, and have higher firm-specific political risk. Lastly, we find that reducing inventory stickiness leads to improved firm performance during periods of increasing policy uncertainty.</p>","PeriodicalId":47220,"journal":{"name":"Economics & Politics","volume":"35 3","pages":"919-948"},"PeriodicalIF":1.5000,"publicationDate":"2023-06-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economics & Politics","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/ecpo.12251","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
This study investigates the impact of economic policy uncertainty (EPU) on asymmetric inventory investment (i.e., inventory stickiness or sticky inventory management). Using a sample of 74,912 US firm-year observations over the 1984–2021 period, we observe a significantly negative relationship between EPU and asymmetric inventory investment. Our cross-sectional analyses reveal that managers' pessimistic expectations regarding future demand and higher cost of funding and maintaining capacity are the channels through which EPU affects asymmetric inventory behavior. Moreover, this negative impact is more pronounced for firms that face longer-duration uncertainty, rely heavily on government purchases, and have higher firm-specific political risk. Lastly, we find that reducing inventory stickiness leads to improved firm performance during periods of increasing policy uncertainty.
期刊介绍：
Economics & Politics focuses on analytical political economy, broadly defined as the study of economic and political phenomena and policy in models that include political processes, institutions and markets. The journal is the source for innovative theoretical and empirical work on the intersection of politics and economics, at both domestic and international levels, and aims to promote new approaches on how these forces interact to affect political outcomes and policy choices, economic performance and societal welfare. Economics & Politics is a vital source of information for economists, academics and students, providing: - Analytical political economics - International scholarship - Accessible & thought-provoking articles - Creative inter-disciplinary analysis
求助内容：
应助结果提醒方式：
京公网安备 11010802042870号
