TY  - JOUR
AU  - Blanchard,Olivier J.
AU  - Melino,Angelo
TI  - Cyclical Behavior of Prices and Quantities in the Automobile Market
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1325
PY  - 1986
Y2  - December 1986
UR  - http://www.nber.org/papers/w1325
L1  - http://www.nber.org/papers/w1325.pdf
N1  - Author contact info:
Olivier J. Blanchard
International Monetary Fund
Economic Counsellor and Director
Research Department
700 19th Street, NW
Rm. 10-700
Washington DC, 20431
Tel: 202-623-7825
Fax: 202-623-7271
E-Mail: blanchar@mit.edu

Angelo Melino
E-Mail: angelo.melino@utoronto.ca
AB  - This paper has a simple goal, that of understanding the joint behaviorof prices and quantities in a particular market. More precisely, it examines whether we can find decision problems for suppliers and buyers, together with a market equilibrium structure, which are consistent with the observed price and quantity time series. Because of the relative homogeneity of the product, of the size of the market, end of the quality of the data, the market chosen is the automobile market.The first conclusion we reach is that this goal is difficult to achieve.The behavior of prices appears inconsistent with simple -- competitive, monopolistically competitive or monopolistic -- market structures. Prices appear, in a well defined sense, to be too "sticky". We then consider potentiail explanations and extensions. None appears completely satisfactory. In particular, the introduction of costs of changing prices does not seem able to explain the joint behavior of prices and quantities.
ER  -