Tests of Production Smoothing in Selected Japanese Industries

Posted: 27 May 2013

See all articles by Dick Beason

Dick Beason

University of Alberta - Department of Marketing, Business Economics & Law

Date Written: June 1, 1992

Abstract

Using monthly physical quantity data on production, sales and inventories for 29 selected Japanese industries, it is found that the usual variance decompositions are generally consistent with the production smoothing model at both seasonal and nonseasonal frequencies. However, the estimated seasonal coefficients in production and sales are highly correlated, which should not be the case if firms smooth production in the face of anticipated seasonal movements in sales. A further test of the model, which implies production should follow a random walk with drift, provides mixed results but particularly negative results at the seasonal frequencies.

Keywords: Inventories, Production, Seasonality, Cost shocks

Suggested Citation

Beason, Dick, Tests of Production Smoothing in Selected Japanese Industries (June 1, 1992). Journal of Monetary Economics, Vol. 31, No. 3, 1993, University of Alberta School of Business Research Paper No. 2013-325, Available at SSRN: https://ssrn.com/abstract=2270013

Dick Beason (Contact Author)

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

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