Measuring the Average Period of Production

Pol Antràs and Vitalii Tubdenov

AEA Papers and Proceedings, 2025, vol. 115, 624-30

Abstract: Building on Böhm-Bawerk (1889), we propose a measure of the average period of production defined as a weighted average temporal distance between the time at which a firm employs its inputs and the time at which these inputs deliver finished goods to consumers. Under stationarity conditions, this measure corresponds to the ratio of a firm's total inventories to the cost of the goods it sells in a given period. Using data from publicly traded companies, we compute this measure for various industries and countries and show that, consistent with theory, it is lower the higher is the cost of capital.

JEL-codes: D21 D24 D25 G31 L60 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1257/pandp.20251090

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