NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Can The Production Smoothing Model of Inventory Behavior be Saved?

Alan S. Blinder

NBER Working Paper No. 1257
Issued in 1984
NBER Program(s):   EFG

The production smoothing model of inventory behavior has a long and venerable history, and theoretical foundations which seem very strong. Yet certain overwhelming facts seem not only to defy explanation within the production smoothing framework, but actually to argue that the basic idea of production smoothing is all wrong. Most prominent wnong these is the fact that the variance of detrended production exceeds the variance of detrended sales.This paper first documents the stylized facts. Then it derives the production smoothing model rigorously and explains how the model can be amended to make it consistent with the facts. Next, estimates of stock adjustment equations derived from the theory are presented and evaluated. Finally, it reviews the theoretical and empirical evidence and tries to drawsome tentative conclusions.

download in pdf format
   (925 K)

email paper

This paper is available as PDF (925 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Blinder, Alan S. "Can the Production Smoothing Model of Inventory Behavior Be Saved?" Quarterly Journal of Economics, August 1986, pp431-453.

Users who downloaded this paper also downloaded these:
Blanchard w0891 The Production and Inventory Behavior of the American Automobile Industry
Eichenbaum w2523 Some Empirical Evidence on the Production Level and Production Cost Smoothing Models of Inventory Investment
Fair w2877 The Production Smoothing Model is Alive and Well
Blinder w0620 Inventories and Sticky Prices: More on the Microfoundations of Macroeconomics
Blinder w1913 More on the Speed of Adjustment in Inventory Models
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us