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American Economic Review: Vol. 96 No. 5 (December 2006)
AER Volume. 96, Issue 5 | 
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AER Forthcoming Articles
Declining Volatility in the U.S. Automobile Industry
Article Citation
Ramey, Valerie A., and
Daniel J. Vine. 2006. "Declining Volatility in the U.S. Automobile Industry."
American Economic Review,
96(5): 1876-1889.
DOI: 10.1257/aer.96.5.1876
DOI: 10.1257/aer.96.5.1876
Abstract
Dramatic changes in the volatility of output occurred in the U.S. auto industry in the early 1980s. Namely, output volatility declined, the covariance of inventory investment and sales grew more negative, and adjustments to production schedules, which in earlier decades stemmed primarily from plants hiring and laying off workers, were more often accomplished with changes in average hours per worker after the mid- 1980s. Using a linear quadratic inventory model with intensive and extensive labor adjustments, we show how all of these changes could have stemmed from one underlying factor?a decline in the persistence of motor vehicle sales. (JEL G31, L25, L62, M11)
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Full-text Article
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Download Data Set (847.80 KB) | Link to Additional Materials (37.02 KB)
Authors
Ramey, Valerie A.
Vine, Daniel J.
Vine, Daniel J.
