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Production, Sales, and the Change in Inventories: An Identity That Doesn`t Add Up


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  • Jeffrey A. Miron
  • Stephen P. Zeldes


We examine two measures of monthly manufacturing production. The first is the index of industrial production; the second is constructed from the accounting identity that output equals sales plus the change in inventories. We show that the means, variances, and serial correlation coefficients of the log growth races differ substantially between the two series, and the cross-correlations between the two seasonally adjusted series are in most cases less than .4. A model of classical measurement error indicates chat in 15 of 20 2-digit industries measurement error accounts for over 35% of the variation in the monthly growth rates of seasonally adjusted industrial production.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2765.

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Date of creation: Nov 1988
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Publication status: published as "Production, Sales, and the Change in Inventories." From Journal of Monetary Economics, Vol. 24, No. 1, pp. 31-51, (July 1989).
Handle: RePEc:nbr:nberwo:2765

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