Interactions between the Seasonal and Business Cycles in Production and Inventories

The American Economic Review, December 1997

Posted: 27 Jul 1998

See all articles by Stephen G. Cecchetti

Stephen G. Cecchetti

Brandeis International Business School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Anil K. Kashyap

University of Chicago, Booth School of Business; National Bureau of Economic Research (NBER); Federal Reserve Bank of Chicago

David W. Wilcox

Federal Reserve Board - Division of Research and Statistics

Abstract

This paper shows that in several U.S. manufacturing industries, the seasonal variability of production and inventories varies with the state of the business cycle. We present a simple model which implies that if firms reduce the seasonal variability of their production as the economy strengthens, and they either hold constant or increase the stock of inventories they bring into the high-production seasons of the year, then they must be facing upward-sloping and convex marginal cost curves. We conclude that firms in a number of industries face upward-sloping and convex marginal-production-cost curves.

JEL Classification: E32, C49

Suggested Citation

Cecchetti, Stephen G. and Kashyap, Anil K. and Wilcox, David W., Interactions between the Seasonal and Business Cycles in Production and Inventories. The American Economic Review, December 1997. Available at SSRN: https://ssrn.com/abstract=108588

Stephen G. Cecchetti (Contact Author)

Brandeis International Business School ( email )

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National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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Anil K. Kashyap

University of Chicago, Booth School of Business ( email )

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National Bureau of Economic Research (NBER) ( email )

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Federal Reserve Bank of Chicago ( email )

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David W. Wilcox

Federal Reserve Board - Division of Research and Statistics ( email )

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United States

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