TY  - JOUR
AU  - Blinder,Alan S.
TI  - Can The Production Smoothing Model of Inventory Behavior be Saved?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1257
PY  - 1984
Y2  - 1984
UR  - http://www.nber.org/papers/w1257
L1  - http://www.nber.org/papers/w1257.pdf
N1  - Author contact info:
Alan S. Blinder
Department of Economics
Princeton University
Princeton, NJ 08544-1021
Tel: 609/258-3358
Fax: 609/258-5398
E-Mail: blinder@princeton.edu
AB  - 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.
ER  -