Why Do Countries and Industries with Large Seasonal Cycles Also Have Large Business Cycles?

47 Pages Posted: 8 Jan 2008

See all articles by Joe Beaulieu

Joe Beaulieu

Board of Governors of the Federal Reserve - Division of Research and Statistics - Industrial Output Section; National Bureau of Economic Research (NBER)

Jeffrey K. MacKie-Mason

UC Berkeley; University of Michigan

Jeffrey A. Miron

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

Date Written: February 1991

Abstract

We show there is a strong, positive correlation across countries and industries between the standard deviation of the seasonal component and the standard deviation of the non-seasonal component of aggregate variables such as output, labor input, interest rates, and prices. After documenting this stylized fact, we discuss possible explanations and develop a model that generates our empirical finding. The main feature of the model is that firms endogenously choose their degree of technological flexibility as a function of the amounts of seasonal and non-seasonal variation in demand. Although this model is intended to be illustrative, we find evidence supporting one of its key empirical implications.

Suggested Citation

Beaulieu, J. Joseph and MacKie-Mason, Jeffrey K. and Miron, Jeffrey A., Why Do Countries and Industries with Large Seasonal Cycles Also Have Large Business Cycles? (February 1991). NBER Working Paper No. w3635. Available at SSRN: https://ssrn.com/abstract=471565

J. Joseph Beaulieu (Contact Author)

Board of Governors of the Federal Reserve - Division of Research and Statistics - Industrial Output Section

20th and Constitution Ave., NW
Washington, DC 20551
United States
202-452-3819 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Jeffrey K. MacKie-Mason

UC Berkeley ( email )

102 South Hall
Berkeley, CA 94720-4600
United States

HOME PAGE: http://jeff-mason.com

University of Michigan ( email )

Ann Arbor, MI 48109-1092
United States

HOME PAGE: http://http:/jeff-mason.com/

Jeffrey A. Miron

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

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