Philly Fed explains inventory build up prior to crisis
A Philadelphia Federal Reserve paper published on Wednesday explains why trade partners stock up on inventories in the run up to a crisis.
The market valuation of inventories held by buyers and sellers of mortgages affects how much leverage they can take, Philip Bond and Yaron Leitnet, the paper's authors, write. Consequently, buyers and sellers may care about the dissemination of any information that affects market valuations of their inventories.
Bond and Leitner analyse how inventories affect
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