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BPEA Article

Current Inventory-Sales Relationships


The sustained economic expansion of the 1960s has coincided with a declining interest in the inventory-accelerator theory of the business cycle. However, while inventories may have lived down their villainous role in the business cycle literature, they remain a major source of economic instability. And at least once--in 1966-67--they nearly ended the "Hallelujah Chorus" of the economic policy makers. In view of the weak performance of inventories in recent months and revisions in some of the historical data, a reexamination of the pattern of inventory accumulation in recent years may be instructive.

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