Increasing Importance of Stocks Due to the Occurrence of External Shocks

Abstract

Aim: The aim of the study is to assess the impact of inventories on the stabilization of business cycles. Achieving the goal includes, on the one hand, drawing attention to the importance of inventory management in the enterprise and optimizing their level for production smoothing. On the other hand, the macroeconomic approach is based on the analysis of changes in the structure of accumulation based on data compiled in the system of national accounts, including assessing the impact of inventories on the stabilization of business cycles.

Methodology: Using input-output methods, the full impact of stocks on GDP and income of institutional sectors was estimated. The empirical part of the study is based on statistical data published in the European Commission database (Eurostat Database), in particular on balance sheets for non-financial assets, sequences of transactions compiled in the system of national accounts and input-output tables (symmetric input-output tables and use tables).

Results: The example of the Czech economy shows that the contribution of inventories to GDP is highly variable, with the importance of inventories increasing in periods of external shocks.

Implications and recommendations: Inventories should be considered a necessary and unavoidable element of business activity, mistakenly treated as a passive and non-profit element. The study aims to juxtapose the microeconomic and macroeconomic approaches to inventory analysis. It seems that its importance is increasing, especially in the uncertain macroeconomic situation that world economies find themselves due to the COVID-19 pandemic or the war in Ukraine.

Originality/value: The analysis contained in the article is an attempt to compare the microeconomic and macroeconomic approaches to inventory analysis, including the particularly rare use of input-output methods to analyze the inventory accumulation.