An empirical study of the interrelationship between employment, price and inventory decisions in UK manufacturing

Abstract

This papel investigates the dynamic behaviour al employment, prices and inventories of finished goods when non-competitivo firms take joint decision rules based upon the optimisation of a certain intertemporal criterion function. A theoretical model is developed to provide the specification of the Euler equations which characterize the previous optimal solutions. These are jointly estimated using data from tha manufacturing sector in the U.K., providing favourable evidence for the model.