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Interactions between the seasonal and business cycles in production and inventories

Stephen Cecchetti (), Anil Kashyap () and David Wilcox ()

No WP-97-06, Working Paper Series, Macroeconomic Issues from Federal Reserve Bank of Chicago

Abstract: This paper shows that in several U.S. manufacturing industries, the seasonal variability of production and inventories varies with the state of the business cycle. We present a simple model which implies that if firms reduce the seasonal variability of their production as the economy strengthens, and they either hold constant or increase the stock of inventories they bring into the high-production seasons of the year, then they must face upward-sloping and convex marginal production cost curves. We conclude that firms in a number of industries face upward-sloping and convex marginal-production-cost curves.

Keywords: Seasonal variations (Economics); Business cycles; Manufactures (search for similar items in EconPapers)
Date: 1997
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