Production, Sales, and the Change in Inventories: an Identity that Doesn't Add Up

52 Pages Posted: 27 Jun 2004 Last revised: 24 Jul 2010

See all articles by Jeffrey A. Miron

Jeffrey A. Miron

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Stephen P. Zeldes

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Date Written: November 1988

Abstract

We examine two measures of monthly manufacturing production. The first is the index of industrial production; the second is constructed from the accounting identity that output equals sales plus the change in inventories. We show that the means, variances, and serial correlation coefficients of the log growth races differ substantially between the two series, and the cross-correlations between the two seasonally adjusted series are in most cases less than .4. A model of classical measurement error indicates chat in 15 of 20 2-digit industries measurement error accounts for over 35% of the variation in the monthly growth rates of seasonally adjusted industrial production.

Suggested Citation

Miron, Jeffrey A. and Zeldes, Stephen P., Production, Sales, and the Change in Inventories: an Identity that Doesn't Add Up (November 1988). NBER Working Paper No. w2765. Available at SSRN: https://ssrn.com/abstract=447207

Jeffrey A. Miron (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Stephen P. Zeldes

Columbia Business School - Finance and Economics ( email )

3022 Broadway
Uris 825, Dept. of Finance & Economics
New York, NY 10027
United States
212-854-2492 (Phone)
212-208-4699 (Fax)

HOME PAGE: http://www.columbia.edu/~spz1

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
20
Abstract Views
530
PlumX Metrics