The Production Smoothing Model Is Alive and Well

Ray Fair ()

No 896, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Monthly data in physical units for seven industries are used to examine the production smoothing hypothesis. The results strongly support this hypothesis. Significant effects of expected future sales on current production are found for four industries, and the estimated decision equations for all seven industries imply production smoothing behavior. The previous negative results regarding the hypothesis appear to be due to the use of poor data, particularly the shipments and inventory data of the Department of Commerce.

Keywords: Production smoothing; investment; inventories (search for similar items in EconPapers)
Pages: 21 pages
Date: 1989-02
Note: CFP 740.
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Citations: View citations in EconPapers (60)

Published in Journal of Monetary Economics (1989), 24: 353-370

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Journal Article: The production-smoothing model is alive and well (1989)
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Persistent link: https://EconPapers.repec.org/RePEc:cwl:cwldpp:896

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