Inventory management and economic instability in high inflation economies: A macrodynamic simulation

This paper analyzes the interrelationships between inventory management and several variables which measure labor market tensions in high inflation economies, and examines their effect on the business cycle following various government policies. The analysis is carried out in a general equilibrium macrodynamic model, which explicitly recognizes the institutional setting in the labor market by assuming overlapping nominal wage contracts. The paper draws attention to the specific effects of speculative hoarding of inventories in high inflation economies on the business cycle.