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Stabilized business cycles with increased output volatility at high frequencies

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  • Kimura, Takeshi
  • Shiotani, Kyosuke

Abstract

In Japan, like many other industrialized countries, output volatility declined dramatically in the 1980s. In order to investigate the cause of this decline, we decompose the variance of output growth by frequency. Our important findings are: (1) The total variance of output growth decreased, which resulted from a reduction in the volatility at business-cycle frequencies; (2) At business-cycle frequencies, the variance of production fell by a larger percentage than did the variance of sales; and (3) In stark contrast, at high frequencies, the variance of production increased, while the variance of sales decreased. These features of production at different frequencies cannot be explained by changes in the sales process and cost-shock process. Instead, improved business practices--such as the adoption of the just-in-time technique--played a direct role in stabilizing the business cycles, while increasing output volatility at high frequencies. J. Japanese Int. Economies 23 (1) (2009) 1-19.

Suggested Citation

  • Kimura, Takeshi & Shiotani, Kyosuke, 2009. "Stabilized business cycles with increased output volatility at high frequencies," Journal of the Japanese and International Economies, Elsevier, vol. 23(1), pages 1-19, March.
  • Handle: RePEc:eee:jjieco:v:23:y:2009:i:1:p:1-19
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    Cited by:

    1. Yusuke Kumano & Ichiro Muto & Akihiro Nakano, 2013. "What explains the recent fluctuations in Japan's output? A structural factor analysis of Japan's industrial production," Bank of Japan Working Paper Series 13-E-10, Bank of Japan.
    2. Mathias Trabandt & Harald Uhlig, 2012. "How Do Laffer Curves Differ across Countries?," NBER Chapters,in: Fiscal Policy after the Financial Crisis, pages 211-249 National Bureau of Economic Research, Inc.
    3. Morikawa, Masayuki, 2016. "Business uncertainty and investment: Evidence from Japanese companies," Journal of Macroeconomics, Elsevier, pages 224-236.
    4. Kumano, Yusuke & Muto, Ichiro & Nakano, Akihiro, 2014. "What explains the recent fluctuations in Japan’s output? A structural factor analysis of Japan’s industrial production," Journal of the Japanese and International Economies, Elsevier, pages 135-153.
    5. Matteo Iacoviello & Fabio Schiantarelli & Scott Schuh, 2011. "Input And Output Inventories In General Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(4), pages 1179-1213, November.
    6. Tsuchiya, Yoichi, 2016. "Do production managers predict turning points? A directional analysis," Economic Modelling, Elsevier, vol. 58(C), pages 1-8.
    7. MORIKAWA Masayuki, 2016. "Business Uncertainty and Investment: Evidence from Japanese companies," Discussion papers 16014, Research Institute of Economy, Trade and Industry (RIETI).
    8. Kumano, Yusuke & Muto, Ichiro & Nakano, Akihiro, 2014. "What explains the recent fluctuations in Japan’s output? A structural factor analysis of Japan’s industrial production," Journal of the Japanese and International Economies, Elsevier, pages 135-153.
    9. Ko, Jun-Hyung & Murase, Koichi, 2013. "Great Moderation in the Japanese economy," Japan and the World Economy, Elsevier, vol. 27(C), pages 10-24.

    More about this item

    Keywords

    Output volatility Inventories Business cycle;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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