The Ebb and Flow of Inventories

by Matthew Kerkhoff
Financial Sense

Ask ten economists what causes recessions, and you’re likely to get fifteen different answers. Some will point to supply or demand shocks, policy errors, inflation, or sticky prices, while others, such as Hyman Minsky, will point toward fragility caused, oddly enough, by stability.

Each recession we experience is unique, and therefore, it’s not surprising that identifying the root cause can be an arduous task.

But all recessionary periods share some of the same characteristics, and we can examine these similarities to identify periods when the probability of an approaching recession is higher than others.

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