Download or read book Inventories Production Smoothing and the Shape of the Cost Function written by Marzio Galeotti and published by . This book was released on 1997 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Inventories Production Smoothing and the Shape of the Cost Function written by Marzio Galeotti and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we present estimates of inventory models based on firm level panel data and investigate whether an over-simplified specification of the production technology may account for the failure to find technological incentives to smooth production in the context of the standard linear-quadratic model of inventory behavior. In particular, we argue that if the role of quasi-fixed factors is not modelled properly, this may lead to inconsistent estimates of marginal costs and, therefore, to erroneous conclusions about the convexity/concavity of the cost function. The model is accordingly extended to allow for a general restricted quadratic cost function, on the assumption that capital is costly to adjust. The evidence obtained by estimating the standard inventory model on a panel of Italian manufacturing firms suggests that marginal costs are decreasing. This result is overturned when one allows for the general quadratic cost function with capital as a quasi-fixed input, however, implying that the firm's technology provides incentives to smooth production. The conclusion that the cost function is convex in output is robust to allowing for adjustment costs for both capital and labor.

Download or read book Production Smoothing and the Shape of the Cost Function written by Marzio Galeotti and published by . This book was released on 1997 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Two Studies of Inventory Investment written by Valerie Ann Ramey and published by . This book was released on 1987 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Production smoothing and the shape of the cost function written by Marzio Galeotti and published by . This book was released on 1997 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Handbook of Macroeconomics written by John B. Taylor and published by Elsevier. This book was released on 1999-12-13 with total page 576 pages. Available in PDF, EPUB and Kindle. Book excerpt: Annotation Part 6: Financial Markets and the Macroeconomy. 19. Asset prices, consumption, and the business cycle (J.Y. Campbell). 20. Human behavior and the efficiency of the financial system (R.J. Shiller). 21. The financial accelerator in a quantitative business cycle framework (B. Bernanke, M. Gertler and S. Gilchrist). Part 7: Monetary and Fiscal Policy. 22. Political economics and macroeconomic policy (T. Persson, G. Tabellini). 23. Issues in the design of monetary policy rules (B.T. McCallum). 24. Inflation stabilization and BOP crises in developing countries (G.A. Calvo, C.A. Vegh). 25. Government debt (D.W. Elmendorf, N.G. Mankiw). 26. Optimal fiscal and monetary policy (V.V. Chari, P.J. Kehoe).

Download or read book Some Empirical Evidence on the Production Level and Production Cost Smoothing Models of Inventory Investment written by Martin S. Eichenbaum and published by . This book was released on 1988 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: The production smoothing model of inventories has long been the basic paradigm within which empirical research on inventories has been conducted The basic hypothesis embedded In this model IS that inventories of finished goods serve primarily to smooth production levels in the face of fluctuating demand and convex cost functions. However once we allow for shocks to technology and the costs of producing output firms will also use inventories to shift production from periods in which production costs are relatively high to periods in which production costs are relatively low. In this sense inventories can serve to smooth production costs rather production levels. In this paper we examine the empirical plausibility of the production level and production cost smoothing models of inventories. Our basic strategy is to derive and contrast a set of unconditional moment restrictions Implied by these models in a way that minimizes the role of auxiliary assumptions regarding market structure and Industry demand. We find overwhelming evidence against the production level smoothing model and very little evidence against the production cost smoothing mode1 We conclude that the variance of production exceeds the variance of sales in most manufacturing industries because the production cost smoothing role of inventories is quantitatively more important than the production level smoothing role of inventories.

Download or read book Seasonality Cost Shocks and the Production Smoothing Model of Inventories written by and published by . This book was released on 1989 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: A great deal of research on the empirical behavior of inventories examines some variant of the production smoothing model of finished goods inventories. The overall assessment of this model that exists in the literature is quite negative: there is little evidence that manufacturers hold inventories of finished goods in order to smooth production patterns. This paper examines whether this negative assessment of the model is due to one or both of two features: costs shocks and seasonal fluctuations. The reason for considering costs shocks is that if firms are buffeted more by cost shocks than demand shocks, production should optimally be more variable than sales. The reasons for considering seasonal fluctuations are that seasonal fluctuations account for a major portion of the variance in production and sales, that seasonal fluctuations are precisely the kinds of fluctuations that producers should most easily smooth, and that seasonally adjusted data is likely to produce spurious rejections of the production smoothing model even when it is correct. We integrate cost shocks and seasonal fluctuations into the analysis of the production smoothing model in three steps. First, we present a general production smoothing model of inventory investment that is consistent with both seasonal and non-seasonal fluctuations in production, sales, and inventories. The model allows for both observable and unobservable changes in marginal costs. Second, we estimate this model using both seasonally adjusted and seasonally unadjusted data plus seasonal dummies. The goal here is to determine whether the incorrect use of seasonally adjusted data has been responsible for the rejections of the production smoothing model reported in previous studies. The third part of our approach is to explicitly examine the seasonal movements in the data. We test whether the residual from an Euler equation is uncorrelated with the seasonal component of contemporaneous sales. Even if unobservable seasonal cost shocks make the seasonal v.

Download or read book Inventories written by Valerie A. Ramey and published by . This book was released on 1997 with total page 106 pages. Available in PDF, EPUB and Kindle. Book excerpt: We review and interpret recent work on inventories, emphasizing empirical and business cycle aspects. We begin by documenting two empirical regularities about inventories. The first is the well-known one that inventories move procyclically. The second is that inventory movements are quite persistent, even conditional on sales. To consider explanations for the two facts, we present a linear-quadratic model. The model can rationalize the two facts in many ways, but two stylized explanations are simple enough and have support support from a number of papers. Both assume that there are persistent shocks to demand for the good in question, and that marginal production cost slopes up. The first explanation assumes as well that there are highly persistent shocks to the cost of production. The second assumes that there are strong costs of adjusting production and a strong accelerator motive. Research to to date, however, has not reached a consensus on whether one of these two, or some third, alternative provides a satisfactory explanation of inventory behavior. We suggest several directions for future research that promise to improve our understanding of inventory behavior and thus of business cycles.

Download or read book Inventory Production Theory written by C.A. Schneeweiss and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: The term inventory-production theory is not well defined. It com prises e. g. such models like cash balance models, production smoothing models and pure inventory models. We shall here mainly be concerned with stochastic dynamic problems and shall give exact definitions in the next section. Most of our work will concentrate on cash balance models. However, production smoothing situations and pure inventory problems will also be investigated. Since we are faced in principle with dynamic stochastic situa tions a dynamic programming approach would be appropriate. This approach, however, due to computational restraints, is limited to only but the simplest models. Therefore, in practice, one ruduces stochastics just in taking forecasts of demand and then treating the problem as a deterministic optimization problem. In addition one often introduces certain safety stocks to safeguard the system from possible forecasting errors. In general, this proce dure is suboptimal. However, there exists one particular situa tion when a separation in a forecasting procedure and a subse quent optimization of the remaining deterministic model is not suboptimal. This is known as the linear-quadratic model, i. e. a model having linear system equations and a quadratic cost crite rion. For this type of model H. A. Simon ~3J and later H. Theil [25J have shown that the above separation property holds. In fact, Simon's and Theil's results are nothing else but what has later and more generally become known to control engineers as Kalman's famous separation principle.

Download or read book Can the Production Smoothing Model of Inventory Behavior be Saved written by Alan S. Blinder and published by . This book was released on 1984 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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 or read book Seasonality Cost Shocks and the Production Smoothing Model of Inventories written by Jeffery A Miron and published by . This book was released on 1986 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Inventories Stock outs and Production Smoothing written by Andrew B. Abel and published by . This book was released on 1985 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: If stock-outs are ignored and if demand shocks are additive, then optimal behavior requires that the marginal cost of production (MC) be equated with the expected marginal revenue of increasing expected sales by one unit (EMR). However, with more general demand shocks (and still ignoring stock-outs), the excess of MC over EMP has the same signas the covariance of the slope of the demand curve and the marginal valuation of inventory. The equality of EMR and MC is also broken by taking account of stock-outs, even if demand shocks are additive. If there is a production lag, then taking account of stock-outs implies that optimal behavior will be characterized by production smoothing even if the cost of production is linear. Two alternative definitions of production smoothing are presented and optimal behavior in the presence of stock-outs displays each type of smoothing

Download or read book Seasonality Cost Shocks and the Production Smoothing Model of Inventories written by Stephen P. Zeldes and published by . This book was released on 2007 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: A great deal of research ...

Download or read book Seasonality Cost Shocks and the Production Smoothing Model of Inventories written by and published by . This book was released on 1987 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Inventories Employment and Hours written by Marzio Galeotti and published by . This book was released on 2002 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Working Paper Series written by and published by . This book was released on 1997 with total page 574 pages. Available in PDF, EPUB and Kindle. Book excerpt: