Declining Volatility in the U.S. Automobile Industry
AbstractDramatic changes in the volatility of output occurred in the U.S. auto industry in the early 1980s. Namely, output volatility declined, the covariance of inventory investment and sales grew more negative, and adjustments to production schedules, which in earlier decades stemmed primarily from plants hiring and laying off workers, were more often accomplished with changes in average hours per worker after the mid- 1980s. Using a linear quadratic inventory model with intensive and extensive labor adjustments, we show how all of these changes could have stemmed from one underlying factor?a decline in the persistence of motor vehicle sales. (JEL G31, L25, L62, M11)
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 96 (2006)
Issue (Month): 5 (December)
Other versions of this item:
- Valerie A. Ramey & Daniel J. Vine, 2005. "Declining Volatility in the U.S. Automobile Industry," NBER Working Papers 11596, National Bureau of Economic Research, Inc.
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
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