Review

The behavior of inventory investment since the beginning of the 1973-75 recession has been a dominant concern of economic analysts. Initially, this concern was motivated by a recognition that a relationship between inventory investment and changes in total output and employment has been one of the most pronounced regularities of the business cycle. This relationship appears to be such a dominant factor in previous postwar recessions that they have been referred to as “inventory recessions.”

Over the past twenty years, abundant attention has been given, both in professional journals and in the popular press, to the wealth redistribution which occurs as a result of unanticipated inflation. Less widely known but equally detailed work has been done on the characteristics and allocative effects of perfectly anticipated inflation. There have been, however, few examinations of the effects of revisions in inflationary expectations and the adjustments which accompany them. It may be that this is due to the belief that such revisions take place extremely gradually, as was indicated by most empirical studies based on adaptive expectations hypotheses, so that their effects would be negligible in magnitude.

The 1977 outlook for food is generally favorable for consumers. Despite damage to certain fruit and vegetable crops last winter, large supplies and relatively stable prices are in prospect for most foods. This was the forecast of the U.S. Department of Agriculture at its annual outlook conference and in recent releases.