Why Do Countries and Industries with Large Seasonal Cycles Also Have Large Business Cycles?

J. Joseph Beaulieu, Jeffrey Mackie-Mason and Jeffrey A Miron ()

No 3635, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We show there is a strong, positive correlation across countries and industries between the standard deviation of the seasonal component and the standard deviation of the non-seasonal component of aggregate variables such as output, labor input, interest rates, and prices. After documenting this stylized fact, we discuss possible explanations and develop a model that generates our empirical finding. The main feature of the model is that firms endogenously choose their degree of technological flexibility as a function of the amounts of seasonal and non-seasonal variation in demand. Although this model is intended to be illustrative, we find evidence supporting one of its key empirical implications.

Date: 1991-02
Note: EFG
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Journal Article: Why Do Countries and Industries with Large Seasonal Cycles also Have Large Business Cycles? (1992)
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