nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

asset pricing with loss aversion using standard preferences for asset pricing has not been very successful to match asset price characteristics such as the risk free interest rate equity premium and the sharpe ratio to time series data behavioral nance has recently proposed more realistic preferences such as preferences with loss aversion to model asset pricing research has now started to explore the implications of behaviorally founded preferences for asset price characteristics encouraged by some studies of benartzki and thaler 1995 and barberis et al 2001 we study asset pricing with loss aversion in a production economy we here employ a stochastic growth model and use a stochastic version of a dynamic programming method with adaptive grid scheme to compute the above mentioned asset price characteristics of a model with loss aversion in preferences as our results show a model with loss aversion performs considerably better than pure consumption based asset pricing models

a serial mixed produce to order and produce in advance inventory model with multiple retailers abstract we formulate a general mixed produce to order and produce in advance inventory model having multiple stocking echelons and multiple retailers we show that the problem to find an optimal inventory policy for such a model with a uniform or a normal demand distribution can be reduced to a general constrained optimization problem

the real consequences of financial stress abstract we introduce a dynamic banking macro model which abstains from conventional mean reversion assumptions and in which similar to brunnermeier and sannikov 2010 adverse asset price movements and their impact on risk premia and credit spreads can induce instabilities in the banking sector to assess such phenomena empirically we employ a multi regime vector autoregression mrvar approach rather than conventional linear vector autoregressions we conduct bivariate empirical analyses using country specific financial stress indices and industrial production for the u s the uk and the four large euro area countries our mrvar based impulse response studies demonstrate that compared to a linear specification response profiles are dependent on the current state of the economy as well as the sign and size of shocks previous multi regime based studies focusing solely on the regime dependence of responses conclude that during a high stress period stress increasing shocks have more dramatic consequences for economic activity than during low stress conducting size dependent response analysis we find that this holds only for small shocks and reverses when shocks become sufficiently large to induce immediate regime switches our findings also suggest that in states of high financial stress large negative shocks to financial stress have sizeable positive effects on real activity and support the idea of unconventional monetary policy measures in cases of extreme financial stress

boom bust cycles leveraging complex securities and asset prices abstract recent history suggests that many boom bust cycles are naturally driven by linkages between the credit market and asset prices additionally new structured securities have been developed e g mbs cdos and cds which have acted as instruments of risk transfer we show that there is a certain non robustness in the pricing of these instruments and we create a model in which both their role in the recent financial market meltdown and in which the mechanism by which they exacerbate leverage cycles is explicit we first discuss the extent to which complex securities can amplify boom bust cycles then we propose a model in which distinct financial market boom bust cycles emerge naturally we demonstrate the interaction of leveraging and asset pricing in a dynamical model and spell out some implications for monetary policy

specialized supplier networks as a source of competitive advantage evidence from the auto industry this study examines the relationship between interfirm asset specificity and performance in the auto industry more specifically i examine the extent to which differences in supplier automaker asset specialization may explain performance differences between japanese automakers nissan and toyota and u s automakers chrysler ford general motors the findings indicate a positive relationship between supplier automaker specialization and performance in particular the data suggest a positive relationship between interfirm human asset cospecialization and both quality and new model cycle time moreover site specialization is found to be positively associated with lower inventory costs the findings suggest that in the auto industry a tightly integrated production network characterized by proximity and a high level of human cospecialization will outperform a loosely integrated production network characterized by low levels of interfirm specialization

information asymmetry and traceability incentives for food safety abstract we define traceability by its precision that is the probability of finding the source of a problem we consider a downstream food processor firm principal that sets traceability precision and contingent payments so to induce homogeneous upstream suppliers agents to exert the principal s preferred level of food safety effort we focus on cases in which food safety crises originate from defects in raw material provided by upstream firms to analytically show that high precision can substitute for high intensive contingent payments and vice versa and thus traceability is not an unequivocal signal for safer food contrary to previous results in the literature we also show that government regulation based on mandatory traceability with sanctions may not necessarily lead to safer food while increasing the food processor s costs finally we use our analytical results to give managerial feedbacks for firms adopting and considering traceability

alcohol consumption and human capital a retrospective study of the literature grossman proposed an individual s health can be viewed as one aspect of their human capital following this line of thought a number of recent papers have reported a positive impact of alcohol consumption on earnings the rationale for the existence of such a relationship is the positive impact of alcohol on physical and mental health we conduct a meta analysis to determine whether such factors as the estimation technique the presence of ex drinkers in the sample possible sample selection bias and publication bias may all contribute to these findings an additional suggestion for the positive relationship between alcohol and wages is the presence of a common set of personality traits that determines drinking behaviour and also leads to higher earnings we examine this relationship by reviewing the literature that investigates if the personality influencing aspects of alcohol consumption influences measures of human capital we also survey the significant body of research that has examined how alcohol consumption has been found to influence educational outcomes and the work force participation of problem drinkers

who pays the bar tab beer consumption and economic growth in the united states what drug provides americans with the greatest pleasure and the greatest pain the answer hands down is alcohol the pain comes not only from drunk driving and lost lives but also addiction family strife crime violence poor health and squandered human potential young and old drinkers and abstainers alike all are affected every american is paying for alcohol abuse phillip j cook paying the tab the costs and benefits of alcohol control 2007 i introduction alcohol consumption has severe social and economic consequences lost productivity disability early death crime family neglect personality deterioration to name a few cook 2007 at the individual level the effects of alcohol consumption have been explored considerably by researchers in different fields including economics medicine public health criminology and sociology however few studies have examined the economic impact of alcohol use at the aggregate level probably due to the research deficiency regarding its aggregate effects some disagreement exists about the overall net benefits of alcohol use on the one hand scholars who have done extensive research on individual outcomes claim that the overall costs of alcohol use outweigh its benefits for example cook and moore 2002 120 state in their review article the production and sale of alcoholic beverages account for a small share of national product in the united states and in other advanced economies however the deleterious effects of alcohol consumption on health and safety constitute a substantial economic burden reducing our overall standard of living on the other hand organizations formed by the producers and distributors of alcoholic beverages claim that the alcoholic beverage industry contributes significantly to the u s economy through job creation and tax revenues according to beer serves america 2011 an organization sponsored by the beer institute and the national beer wholesalers association nbwa directly and indirectly the beer industry employs approximately 1 8 million americans paying them over 71 billion in wages and benefits the industry pays over 44 billion in business personal and consumption taxes including 5 3 billion in excise taxes and 5 8 billion in sales gross receipts and other taxes 1 similarly the distilled spirits council of the united states discus 1999 the national trade association representing america s leading distillers and about 70 of all distilled spirits brands sold in the united states states that the alcohol beverage industry is a major contributor to the u s economy through job creation wages and taxes 2 room and jernigan 2000 point out that the benefits reaped from the alcohol industry in terms of economic development should be weighed against the negative impacts on economic development in addition to public health they go on to say that alcohol s contribution to total production can vary tremendously from country to country generating 3 of total manufacturing value added in argentina or the netherlands but as little as 0 07 in iran aside from the aforementioned contributions of the alcohol industry to the economy often cited by the industry itself supply side efforts also play a role in the consumption of alcohol this can be done through influencing government regulation of the market for alcohol and selling cheap alcohol in bulk which has a devastating public health impact stockwell and crosbie 2001 indeed the economic burden of excessive alcohol consumption has been found to be substantial recently estimated at 223 5 billion bouchery et al 2011 although a few studies have examined the impact of macroeconomic conditions on drinking prevalence and patterns such as those by ruhm and black 2002 and ruhm 1995 we are not aware of any studies exploring the impact of alcohol consumption on economic growth

the morning after alcohol misuse and employment problems using a rich recent and nationally representative longitudinal survey specifically designed to examine alcohol use and associated problems we investigate the effects of alcohol misuse on a series of understudied and perhaps less common employment problems such problems include being fired or laid off from a job sustained unemployment and conflicts with a supervisor and or co worker after controlling for time invariant omitted variables via fixed effects estimation we find evidence that three measures of alcohol misuse are significantly related to employment problems the results offer new information on the potential adverse labour market effects of alcohol misuse and shed light on potential mechanisms through which alcohol misuse may impact intensive labour supply and or wages

a caveat on the measurement of productive efficiency abstract the correspondence between used performance measures and enterprise objectives such as profit maximization and cost minimization is fundamental for manufacturing companies this paper identifies and critically examines a minimal set of relevant properties that a productivity index needs to satisfy to rightly assess performance development of a decision making unit commonly applied and suggested productivity measurement techniques such as partial efficiencies total factor productivity tfp index number approaches integrated partial efficiencies and operational competitiveness ratings are analyzed in order to assess the alignment with superior objectives there is a considerable spread in the results of this class of models and the interpretation may prove difficult or misleading as these apparently less complicated productivity measures increasingly are employed as a component in evaluation of manufacturing efficiency the question is of high managerial relevance in particular the paper points out inconsistencies with properties related to commensurability monotonicity and implications of maximizing behavior based on this viewpoint issues such as the consistency with profit maximization will be shown extra interest the paper also provides a critique of previous work in non parametric efficiency analysis where properties have been postulated or based on other arguments the findings suggest that there is no globally superior measurement technique to be found in this class and that care should be taken when evaluating managerial performance not to penalize rational behavior

money liquidity and monetary policy in a market based financial system banking and capital market developments are inseparable and funding conditions are closely tied to fluctuations in the leverage of market based financial intermediaries offering a window on liquidity the balance sheet growth of broker dealers provides a sense of the availability of credit contractions of broker dealer balance sheets have tended to precede declines in real economic growth even before the current turmoil for this reason balance sheet quantities of market based financial intermediaries are important macroeconomic state variables for the conduct of monetary policy

input and output inventories abstract this paper presents a new stage of fabrication inventory model with delivery usage and stocks of input materials that distinguishes between gross production and value added it extends the linear quadratic model of output inventories by adding the joint determination of input inventories empirically input inventories are more important than output inventories maximum likelihood estimation of the decision rules yields correctly signed and significant parameter estimates using data for nondurable and durable goods industries but the overidentifying restrictions of the model are rejected the value added specification dominates because adjustment costs on materials usage are critical to fitting the data

taking stock a critical assessment of recent research on inventories empirical and theoretical aspects of inventory behavior became hot topics in the 1950s and early 1960s no one seemed to notice the tension that was developing between the emerging macroeconomic and microeconomic views of inventories macroeconomists routinely thought of inventories as a destabilizing factor yet the prevailing micro theory viewed inventories as a stabilizing factor it was a fascinating question that was barely explored instead somewhat inexplicably interest in inventories dried up as if inventories were of minor economic significance and little intrinsic interest by the early 1980s then economists once again knew something they had known in the 1950s that inventory investment is of first order importance in business cycles but they were also beginning to realize that the standard production smoothing buffer stock model of inventories was in deep trouble this paper focuses on developments since that realization

hedging and financial fragility in fixed exchange rate regimes currency crises that coincide with banking crises tend to share at least three elements first banks have a currency mismatch between their assets and liabilities second banks do not completely hedge the associated exchange rate risk third there are implicit government guarantees to banks and their foreign creditors this paper argues that the first two features arise from banks optimal response to government guarantees we show that guarantees completely eliminate banks incentives to hedge the risk of a devaluation our model also articulates one reason why governments might be tempted to provide guarantees to bank creditors guarantees lower the domestic interest rate and lead to a boom in economic activity but this boom comes at the cost of a more fragile banking system in the event of a devaluation banks renege on foreign debts and declare bankruptcy

a note on the econometric use of constant dollar inventory series abstract one dollar of finished goods inventories does not represent the same amount of physical goods as one dollar of sales when department of commerce constant dollar series are used this can cause seriously biased regression estimates

production stability in a supply chain environment abstract there is evidence that the growth rate of gdp in the united states stabilized in 1984 and improvements in production management are frequently cited as a source this paper defines the quality of production as the scale of the firm s production shock and assumes that the firm can exercise control over the scale of the shock the firm is assumed to operate in a supply chain environment and the question of interest is what if any influence the adoption of more reliable production techniques by a single firm has for aggregate volatility the results indicate that the adoption of more reliable production techniques by a single firm typically have minor effects on aggregate volatility because the benefit dies out rapidly as the product moves downstream the exceptions are those cases in which the firm adopting the improved technology lies near the end of the chain there is also some benefit when deliveries of materials to the initial firm in the production chain stabilize

production management output volatility and good luck abstract this paper models the scale of the technology shocks as a decision variable whose value is determined by the production manager it is shown that smaller shocks enhance profit in several ways and thus the firm has an incentive to adopt more reliable production technologies the adoption of these technologies may account for the good luck hypothesis in which the stabilization of gross domestic product gdp since 1984 is attributed to smaller shocks it differs from this hypothesis in two respects first the reduced volatility should be permanent second the stabilization does not require smaller intrinsic shocks to the economy

the determinants of manufacturing inventories in the uk the authors examine the determinants of inventory holding by the u k manufacturing sector over the period 1968 89 they find that inventory levels respond positively to output and its conditional variance and negatively to the level of gearing tehnological innovation in the form of computerized inventory control leads to a fall in the stock output ratio epirical results for inventories are examined in a cointegration and a general to specific error correction model with conditional variances estimated using an arch framework a backward looking error correction model is found to outperform a forward looking model although the latter also provides a reasonable fit to the data copyright 1993 by royal economic society

critical debt and debt dynamics we study the debt dynamics and sustainable debt for an open economy which borrows from abroad in order to nance consumption to service the debt the country may exploit a renewable resource we show that there is for every resource stock r a critical level bh r of debt above which debt tends to in nity but below which it may be steered to zero we demonstrate how to compute bh r using an ode of steepest descent if the economy maximizes a discounted integral of utility depending on consumption and the resource stock the critical debt bh r may be reached in nite time in such a situation slight perturbations of the optimal consumption lead to insolvency the maximum principle ceases to be valid in this case 2000 elsevier science b v all rights reserved jel classixcation c61 f32 f34 o16

german inventory to sales ratios 1971 2005 an empirical analysis of business practice abstract the purpose of this study is to test empirically for the first time the general hypothesis that inventory to sales ratios have decreased over time in the german economy although inventory reduction has been a prevalent topic in the production and operations management literature there is a lack of empirically confirmed answers to questions they are as follows have inventories in german firms decreased overall during the past decades what sectors of german industry are leading lagging behind inventory reduction has inventory reduction developed differently for raw materials work in process or finished goods in which periods was marginal inventory reduction greatest to the best of our knowledge this empirical study is the first to broadly investigate inventory development from the 1970s until the present for a major european economy germany and will provide the first answers to the research questions stated above using aggregate industry level data provided by the deutsche bundesbank we show that inventory levels decreased overall in many sectors of german industry this reduction was mainly marked for raw materials and finished goods particularly for the second half of the time frame investigated

developments in global inventory investment abstract this paper analyses some of the connections between macroeconomic inventory data and other gdp characteristics until now this issue has got relatively low interest though we believe it can be important in understanding macroeconomic phenomena after a brief summary of previous research six hypotheses are formulated regarding tendencies of the ratio of inventory investment to gdp and its relationship with the level of development growth and fluctuations of gdp elementary statistical methods are applied on an oecd database containing 14 of the most developed economies of the world the analysis mostly supports the hypotheses however due to the limitations by the quality of the database and the methodology used this support is not very reliable this calls attention to the need for further research on the subject

stability of perishable goods in cold logistic chains abstract we consider that production and logistics facilities in the supply chain are positioned between the origin and the supply market or in a part of it any changes in time distance or temperature in the chain could cause the net present value of the activities and their added value in the supply chain to be perturbed in reality the perturbations can be robust the natural question arises is to what are the effects of some perturbations in a supply chain in its production or distribution part on the stability of perishable goods in such systems and what is the appropriate control which keeps the product on the required level of quality and quantity at the final delivery these analyses are especially important to assure the stability of cold chains in the cold chains management ccm what conditions should be fulfilled to assure that after such robust perturbations of parameters and especially time delays lead times and some other delays the behaviour of the logistics chain would still be within the prescribed limits the formulation obtained in the time domain will be compared with the formulation in the frequency space introduced by grubbstrom in his paper on the application of the laplace transform to certain economic problems manage sci 7 1967 558 and with the later studies of his school their model was extended by the authors to the complete logistic chain where location and with it also the distance between the activity cells of logistic chain play an important role

does the time shape of inventory data hold clues on inventory behaviour abstract this paper tries to show that there may be a serious problem in the way inventory data are observed and processed inventory cycles may be asymmetric and the asymmetries may switch directions over the business cycle that is inventory holdings may follow a strongly non linear time path that cannot be represented by periodic observations that are appropriate for stationary processes it may lead to a cumulative error with passage of time in the difference between the actual inventory levels and the data we think monitor them it has been shown that temporal aggregation leads to a downward bias in the estimated speed of adjustment of the flexible accelerator model 1 2 assuming this model correctly describes inventory behaviour and that the objective is to recover the model in the data this evidence raises the question why is there this estimation bias could it be that the bias results from ignoring the time shape of the data if this is true more frequent observations could reduce that bias this paper tries to show that the time shape of inventory data may have a significant effect on what we observe with periodic readings

an illustration of the essential difference between individual and social learning and its consequences for computational analyses abstract drawing a conclusion from recent insights in evolutionary game theory we show that a so called spite effect implies that there is an essential difference between individual and social learning we illustrate its consequences for the choice of computational tools in economics and social settings in general by analyzing two variants of a genetic algorithm

stochastic considerations of grubbstrom molinder model of mrp input output and multi echelon inventory systems abstract in a recent paper grubbstrom and molinder 1994 grubbstrom and molinder studied theoretically the dynamic relationship between mrp input output analysis and multi echelon inventory systems in this paper we upgrade this approach including in the model the uncertainty of external demand and decision theory elements in the model we suppose that we know only the upper and lower bounds of external demand rate and because of lack of information that the external demand is uniformly distributed the complete decision model for our case is considered and the advantages of this approach are demonstrated

a macroeconomic model with a financial sector this paper studies a macroeconomic model in which financial experts borrow from less productive agents we pursue four sets of results i the economy is prone to instability and occasionally enters volatile episodes as volatility spikes agents precautionary motive increases depressing prices even further log linear approximations fail to capture these non linear effects that can cause economies to be significantly depressed for long periods of time ii endogenous risk during volatile episodes increases asset price correlations iii financial experts impose a negative externality on each other and on the labor sector by not maintaining adequate capital cushion and funding structure iv while risk sharing within the financial sector through securitization and derivatives contracts reduces many inefficiencies it can also amlify systemic risks

do drinkers earn less theoretical work by becker and others on human capital led initially to empirical research on the determinates of earnings interest in human capital has now spread to other areas especially health this movement is in conjunction with societal concerns regarding the role of diet and environmental factors on human well being and performance following becker 1 and grossman 9 economists expect to find a significant relationship between health and earnings health aspects of human capital have been extensively explored since the early work of grossman 9 10 good health is both beyond the control of the individual exogenous as a result of genetic factors and random events and controllable endogenous through the regulation of activities such as smoking drinking eating exercise and other informed choices this study examines the relation between earnings and drinking curiously little rigorous empirical work has been done on the relation between earnings and drinking irving fisher s claim to the contrary 1 there is little evidence that prohibition led to substantial if any productivity increases although it is established that excessive drinking leads to poor health the empirical evidence regarding earnings and drinking is mixed and inconclusive according to the u s government abusive drinkers earn less in their biennial reports to congress the national institute on alcohol abuse and alcoholism niaaa estimates the economic cost to society of alcohol abuse approximately half of this cost arises from the estimated loss in earnings productivity due to abusive drinking 2 their approach consists of estimating a wage equation which includes human capital variables as well as a dichotomous abusive drinking variable and quantity of alcohol consumed 3 berger and leigh 3 used a sample selection model to test whether drinkers earned more or less than nondrinkers they divided their sample from the 1972 73 quality of employment survey into two categories drinkers and nondrinkers using a sample selection correction estimator hedonic wage regressions for each category and by sex were estimated they found that drinkers moderate and abusive combined earned more than nondrinkers comparisons were then made between wages from each regression with demographic and human capital variables set at

the production and inventory behavior of the american automobile industry understanding inventory movements is central to an understanding of business cycles this paper presents an empirical study of the behavior of inventories in the automobile industry it finds that inventory behavior is well explained by the assumption of intertemporal optimization with rational expectations the underlying cost structure appears to have substantial costs of changing production as well as substantial costs of being away from target inventory thelatter being a function of current sales given this cost structure whether inventory behavior is stabilizing or destabilizing depends on the characteristics of the demand process in the automobile industry inventory behavior is destabilizing the variance of production is larger than the variance of sales

discussing the parameters of preservation of perishable goods in a cold logistic chain model the paper discusses the parameters of preservation of perishable goods in cold logistic chains the key parameters are the intensity of deterioration of goods the conservation effect of perishable goods and the delay of activation of the conservation effect the values of these parameters determine the quantity of the product being deteriorated in the logistic chain and the extent to which the deterioration can be alleviated econometric estimation thus presents the quantity effects of preservation procedures whereas the financial effects can be derived using the proper price categories in the calculation of the net present value or the annuity stream in this way one can determine whether the implementation of preservation procedures is more rational than the purchase of an attainable insurance policy

business cycle stylized facts and inventory behaviour new evidence for the euro area abstract the purpose of this paper is for the first time to use business tendency survey data first to identify new facts that are useful for the interpretation of the decline in the volatility of real activity in the euro area and second to test the inventory management hypothesis as an explanation for the great moderation in europe we present stylized facts from the business tendency data on series for inventories current production current orders and expected production for the euro area emphasizing the decline in the volatility of the series further we investigate whether the decline in inventory volatility can be attributed to an endogenous change in the persistence of shocks to the accumulation dynamics of inventories or to an exogenous change in the shocks hitting the inventory optimisation process our results at euro level generally indicate that there is no evidence of a break in the inventory accumulation process on the contrary the impact of exogenous shocks on inventory volatility appears to be steadily declining over time beginning from the mid 1980s

the cyclical behavior of strategic inventories this paper presents a model in which inventories are used by a duopoly to deter deviations from an implicitly collusive arrangement higher inventories allow firms to punish cheaters more strongly and can thus help to maintain collusion we show that when demand is high the incentive to deviate increases so that increases in inventories may be optimal for the duopoly this rationalizes the observed positive correlation between inventories and sales in our empirical section we show that as our model predicts this correlation is more important in concentrated industries we also provide several examples where inventories have been a factor in cartel behavior

towards a more economic production and just in time delivery system abstract we study a system in which a batch production supplier participates in just in time jit delivery of its products to a jit buyer firm we demonstrate that under certain conditions a small adjustment of previously agreed product selling price can result in a more economic production and jit delivery system with reduced delivery quantity and hence increased delivery frequency in the case when both buyer and supplier share equal profit margin optimal levels of adjustment for price and delivery frequency can be obtained that maximize the profit margin a numerical example is used to illustrate the results

stochastic properties of a production inventory process with planned production using transform methodology abstract we consider a stochastic inventory process in which demand is generated by individual events separated by independent stochastic time intervals whereas production takes place in batches of possibly varying sizes at different points in time the resulting processes are analysed using laplace transform methodology expressions for inventory and stockouts are developed applying the theory of residues an example includes poisson distributed demand intervals assuming costs for set ups for carrying inventory and for stockouts conditions are developed for determining the optimal production policy on the one hand when applying the traditional average cost measure on the other when applying the annuity stream principle

testing for volatility changes in u s macroeconomic time series we test for a change in the volatility of 214 u s macroeconomic time series over the period 1959 1999 we find that approximately 80 of these series have experienced a break in unconditional volatility during this period even though more than half of the series experienced a break in conditional mean most of the reduction in volatility appears to be due to changes in conditional volatility our results are robust to controlling for business cycle nonlinearity in both mean and variance volatility changes are more appropriately characterized as instantaneous breaks than as gradual changes nominal variables such as inflation and interest rates experienced multiple volatility breaks and witnessed temporary increases in volatility during the 1970s on this evidence we conclude that the increased stability of economic fluctuations is widespread

inventory investment and output volatility abstract this paper reports the results of a detailed examination of the hypothesis that improved inventory management and production techniques are responsible for the decline in the volatility of u s gdp growth our innovations are to look at the data at a finer level of disaggregation than previous studies to exploit cross sectional heterogeneity to obtain clearer identification of this hypothesis and to provide a complete decomposition of the change in gdp volatility at the aggregate level changes in inventory behavior can account directly for almost half of the total reduction in gdp volatility however reduced volatility of sales and lower covariance among the output of major sectors in the economy each account for more than one fourth of the reduction in gdp volatility improved inventory management appears to be associated loosely with lower volatility at the industry level

a comparison of the behavior of japanese and us inventories abstract this paper compares the cyclical and secular behavior of japanese and us inventories at the aggregate and sectoral level 1967 1987 while as is well known us inventories are sharply procyclical japanese inventories are only mildly procyclical in neither country do inventory and sales move together in the long run in the sense that the two series do not seem to be cointegrated in japan but not in the us there is a secular decline in the inventory sales ratio

supply chain efficiency value creation and the economic crisis an empirical assessment of the european automotive industry 2002 2010 abstract this paper seeks to evaluate the development of supply chain sc efficiency and the resulting impacts on company value in a secondary data analysis of the european automotive industry the trends of cost efficiency and working capital performance in the years 2002 2010 and the resulting value impacts are assessed it is detected that many companies failed to manage cost and working capital in a balanced and value adding way which resulted in considerable value losses the economic crisis is identified as an amplifier but not the major cause of these negative trends originality and value of the paper arise from the scarcity of financial analyses that focus on the car sector or that measure and compare several factors of sc efficiency or value creation

the resurgence of inventory research what have we learned abstract recent empirical and theoretical research on business inventories is surveyed and critically evaluated while most inventory research has had macroeconomic motivations we focus on its microtheoretic basis and on potential conflicts between theory and evidence the paper asks two principal questions first how can inventories which are allegedly used by firms to stabilize production nonetheless be a destabilizing factor at the macroeconomic level second why if firms are following the production smoothing model is production more variable than sales in many industries we suggest that the so called s s model may help answer both questions

a multi country analysis of aggregate inventory behavior abstract the paper provides an analysis of macroeconomic inventory trends using eight different modes we have studied the connection between inventory intensity ratio of inventory investment to gdp and the various components of gdp both as simultaneous and lagged variables data of 88 countries have been used for the analysis the analysis supports previous studies according to which even though no strong connection can be disclosed a few interesting consequences can be drawn concerning the differences of inventory intensity in different groups of countries the relation of effects of lagged and simultaneous variables and the significance of various components of gdp

industry evidence of enhanced production stability since 1984 abstract mcconnell and perez quiros have recently provided evidence that the growth rate of gdp has stabilized since 1984 they conclude that the enhanced stability can be attributed to improvements in inventory management in the durables sector this study examines the behavior of output in two digit sic manufacturing industries in an effort to determine whether this increase in stability is evident in less aggregated data after accounting for changes in demand volatility output stabilized in four of the six 2 digit durables industries modeled here total durables output stabilized by 9 these improvements appear to be the result of milder short run output responses to demand shocks this suggests that output has become less responsive to demand shocks and casts doubt on enhanced flexibility of production that should be characteristic of improved production management

multiple regimes in the us inventory time series a disaggregate analysis abstract switching models have been used previously to document the presence of multiple regimes in the growth rate of the us gdp as fluctuations in inventory investment are known to play a major role in business cycles it is likely that inventory growth patterns are also subject to alternating regimes in the present paper simple and markov switching models are applied to inventory series at different levels of manufacturing and trade with a view to discovering the presence of multiple regimes the findings suggest that the growth rate of retail inventories contains significant regime switches and that these corresponds in all cases with switches in the gdp growth rate regime though some extra switches are noted in the retail inventory series

the sensitivity of an empirical model of married women s hours of work to economic and statistical assumptions this study undertakes a systematic analysis of several theoretic and statistical assumption s used in many empirical models of female labor supply using a singl e data set psid 1975 labor supply data the author is able to replic ate most of the range of estimated income and substitution effects fo und in previous studies in this field he undertakes extensive specif ication tests and finds that most of this range should be rejected du e to statistical and model misspecifications the two most important assumptions appear to be the tobit assumption used to control for sel f selection into the labor force and exogeneity assumptions on the wi fe s wage rate and her labor market experience copyright 1987 by the econometric society

the effect of alcohol use on wages 1988 the effect of alcohol use on wages applied economics vol 20 no 10 pp 1343 1351

has production management improved since 1984 kim and nelson 1999 and others have recently presented evidence of a dramatic decline in the volatility of real gross domestic product gdp when the data are plotted the break date is easily identified as 1984 kim and nelson conclude that the enhanced stability is broadly based but statistical analysis by mcconnell and perez quiros 2000 hereafter mpq points to reductions in inventory volatility in the durables sector as the source of the newfound stability although inventory investment is a very small component of gdp changes in inventory investment are one of the most volatile components of changes in gdp ramey and west 1999 calculate that declines in inventory investment typically account for 49 of reductions in u s gdp during recessions inventories in the durables sector are substantially more volatile than in the nondurables sector and thus inventory investment in this sector is more likely to contribute to macroeconomic instability the 1984 break date is intriguing because it coincides with the rising popularity of new production management techniques such as just in time jit 1 hall 1983 describes jit as an emphasis on producing exactly what is needed and conveying it to where it is needed precisely when required he cites several components to the successful implementation of jit but one of the major components is flexible production implying rapid response and the ability to profitably produce only what is immediately required in this ideal environment no unfilled orders or finished goods are accumulated and whatever raw materials and work in process must be accumulated are quickly processed more generally the more flexible and well coordinated the production process the more quickly output can respond to a demand shock 2 the questions addressed here are as follows 1 is there evidence of structural change in output 2 did the structural change if any occur around 1984 3 did output track demand more closely following the structural change the answers to all three questions must be yes to support the contention that improved production management is responsible for the stabilization of gdp the analysis is carried out at the industry level to identify those industries that satisfy the criteria the quality of production management is measured as the difference between the log of output and the log of new orders both measured monthly new orders represent demand and are equivalent to sales among firms that hold no unfilled orders if the firm achieves the ideal efficiency then output is identical to demand more generally efficiency is reflected in the time required for the firm to return inventories and unfilled orders to their target values following a shock to demand or output an increase in efficiency implies a more rapid output response to demand shocks so that any differences between output and demand are resolved more rapidly structural change is identified with tests for structural change with unknown break dates developed by andrews 1993 and andrews and ploberger 1994 following herrera and pesavento s 2004 industry level analysis the tests allow for multiple breaks their tests for stability are conducted on univariate autoregressive models of sales and inventories by stages of fabrication here the growth rate of output or the difference between the log of output and the log of new orders is the dependent variable allowing for a direct observation of structural change in the variable of interest in addition the models are richer in that variables such as new orders and raw materials are included on the right hand side to determine the sensitivity of the break date to potential sources of any change in output behavior several studies in addition to herrera and pesavento s 2004 have examined industry level data for evidence of structural change that might indicate improvements in production management

problems with using traditional aggregate inventory to sales ratios abstract changes in traditionally constructed aggregate inventory to sales ratios are shown to not necessarily measure changes in underlying subsector inventory behavior this is because while traditionally constructed aggregate inventory to sales ratios can be viewed as the weighted average of the underlying subsector inventory to sales ratios the aggregation weights vary over time reflecting shifts in the composition of sales across the subsectors for example aggregate ratios can increase when most of the underlying subsectors are reducing inventory to sales ratios this is shown to have been the case for the us retail sector as a solution to this measurement problem the use of fixed weight aggregate inventory sales ratios is proposed these should help business cycle analysts and researchers better gauge the condition of inventories

firm performance under just in time and traditional proxies for profit maximization abstract when the profit function is too complex to maximize directly firms must rely on some other performance criterion to guide work station activity simplification is achieved by emphasizing either flow or stock management flow management seeks to ensure that no work station is starved by available inputs stock management seeks to minimize inventories this paper develops a model to assess the performance of these two approaches for a firm that can carry both input and output inventories the model includes shocks to both demand and production and the possibility of a stockout is explicitly reflected in the optimization problem stock management dominates flow management when carrying costs are sufficiently large when carrying costs are moderate the strategy of simply ignoring shocks to demand and capacity dominates both stock and flow management the flow management approach is superior only when carrying costs are very small

inventory investment over the business cycle in the eu and the us abstract this paper investigates the business cycle properties of aggregate inventory investment in the countries of the european union eu and the us given the experience of the latest recessions this issue becomes particularly interesting for the study of the propagation mechanism of business cycles the kydland prescott methodology was used to derive and organize the business cycle features the results showed that business cycle fluctuations in the eu are more volatile than those in the us the contribution of the declines of inventory investment in recessions has also been greater in the eu important similarities though were identified as to the extent of the destabilizing effect of inventory investment cycles in the overall economic activity

operations research in inventory management a review and critique the objectives of inventory management including the relevant related costs are examined in this paper a brief review of standard problems that have been effectively solved is presented however we point out that a serious gap exists between theory and practice in many organizations suggestions are made for bridging this gap finally a list is provided of a number of research problems whose implementable solution would have a major beneficial impact on the practice of inventory management

deal or no deal the effect of alcohol drinking on bargaining alcohol drinking during business negotiation is a very common practice particularly in some east asian countries does alcohol consumption affect negotiator s strategy and consequently the outcome of the negotiation if so what is the mechanism through which alcohol impacts negotiator s behavior we investigate the effect of a moderate amount of alcohol on negotiation using controlled experiments subjects are randomly matched into pairs to play a bargaining game with adverse selection in the game each subject is given a private endowment the total endowment is scaled up and shared equally between the pair provided that they agree to collaborate it is found that a moderate amount of alcohol consumption increases subjects willingness to collaborate thus improving their average payoff we find that alcohol consumption increases neither subjects preference for risk nor altruism a possible explanation for the increase in the likelihood of collaboration is that subjects under the influence of alcohol are more cursed in the sense of eyster and rabin 2005 which is supported by the estimation results of a structural model of quantal response equilibrium

inventory investment and gdp characteristics in oecd countries abstract there are very few research studies on macroeconomic inventory behaviour of various countries it is clear that macro inventories are the results of a large number of individual microdecisions however we believe that it is worth analysing how inventories develop in the individual countries and why we can see different tendencies this paper is the newest piece in a series of studies on the above subject we use the oecd database to analyse inventory trends between 1987 and 2004 in nine of the most developed economies of the world annual inventory investment data are used and their connections with other components of gdp expenditure governmental and private consumption investment in fixed assets and foreign trade balance as well as the annual growth rate of gdp are examined by multi variable statistical analysis conclusions include the steadily decreasing tendency of inventory fluctuations the varying periods of higher and lower rates of inventory investments and the differences of main influencing factors by country

the behavior of manufacturers inventories evidence from us industry level data abstract recent empirical research on inventory behavior makes extensive use of disaggregated data both from the 20 two digit manufacturing industries identified in the standard industrial classification sic system and physical product data from lower levels of aggregation economists have traditionally grouped these industries by durability of final product or by the presence or absence of unfilled orders for comparison recent research by mattey and strongin economic review federal reserve bank of san francisco 2 1997 3 17 suggests that production technology affects the flow of material through the production process and the use of labor and capital in manufacturing a review of the empirical inventory literature reveals patterns that can be explained by differences in production technology in studies that use both two digit industry data and disaggregated physical product data from four and five digit industries thus there may be more heterogeneity in disaggregated inventory data than was previously thought

has inventory management in the us become more efficient and flexible a macroeconomic perspective abstract this paper examines the seeming eradication of evidence for improved inventory management since the early 1980s suggested by the aggregate data in the january 1993 revision of the bureau of economic analysis inventory and sales estimates for us manufacturing and trade it analyzes inventory sales output orders ratios at the published level of detail to determine whether at least some components continue to show clear evidence of increased long run efficiency after 1982 further it investigates three other potential avenues of improved inventory management greater cyclical flexibility adjusting of inventory levels more fully to cyclical peaks and troughs faster adjustment to near term desired levels and diminished buffer stock behavior for each aspect and each inventory component several indicators are examined jointly to assess the evidence for improved management the incidence of positive assessments is then viewed across components to judge their overall role substantial evidence for improved long run efficiency is largely confined to materials and work in process inventories in certain manufacturing industries rising inventory sales ratios for other components centered in retail trade are offsetting elements significantly greater cyclical flexibility and faster speeds of adjustment are more widespread although again centered in manufacturing there is virtually no evidence of diminished buffer stock behavior

trend breaks in us inventory to sales ratios abstract this paper documents econometrically that us inventory to sales ratios have time trends and that there have been significant breaks in these time trends at both the aggregate and industry level using techniques developed by bai rev econ stat 1997 551 and by bai and perron econometrica 66 1 1998 47 we simultaneously estimate the time trend parameters and the dates of statistically significant breaks in those trends using data from 1967 through 2001 it is estimated that aggregate manufacturing and trade inventory to sales ratio trended upwards at a 0 76 year rate before 1985 q3 and has trended downwards at a 1 29 year rate since then downtrends are estimated to have begun in manufacturing ratios in 1983 wholesalers in 1985 and retailers in 1990 before the mid 1990s nearly all the reductions in ratios occurred in industries carrying durable goods examination of the timing and possible explanations of trend breaks for the 20 two digit manufacturing industries suggests that breaks are much more likely to have occurred in recessions and may be related to changes in the variance of the industry s sales growth rate

long term trends in inventory investment in traditional market and post socialist economies abstract inventories form a small but important part of national wealth and constitute the most volatile component of gdp their moves are important indicators of the dynamics of the economy both at the micro and macro level in this paper the authors venture to explain long term macroeconomic inventory investment trends from new perspectives we compiled a data set of 24 oecd countries for the 1970 2011 time period and addressed three sets of questions how can inventory investment be characterised in the sample countries and what are the general tendencies does the analysis on the substantially larger data set compared to those in our previous studies verify earlier results regarding the declining global trend in inventory investment and the convergence of inventory features in different countries a quarter of a century ago a substantial change in the economic systems of certain oecd countries took place the transition of central eastern european countries from planned to market economies the difference in inventory behaviour in the two sets of countries was obtrusive before the transition the changes following the transition reveal very important consequences of systemic changes are there substantial connections between fundamental country characteristics and inventory behaviour can regression and correlation analysis reveal some decisive relationship between certain macroeconomic indicators and inventories our analysis resulted in mostly positive or at least meaningful answers to the above questions and opened up a broad field for further research

alcoholism work and income this article reports on an empirical analysis of the relationships between alcoholism and income and working we show that the relationships between alcoholism and labor market success have important age or life cycle dimensions we present evidence that alcoholism may affect income more by restricting labor market participation than by affecting the wages of workers finally we demonstrate that the effects of alcoholism on earnings depend on the extent to which one controls for other covariates associated with alcoholism as such we suggest that there may be important indirect as well as direct effects of alcoholism on labor market success

analysis and forecasting of demand during promotions for perishable items this study examines promotions for perishable products in a retail environment we analyze the impact of relative price discounts on product sales during a promotion and shed light on how to build models to forecast promotional demand for perishable products preliminary analyses based on regression models and a large dataset from a retailer do not reveal conclusive evidence for the presence of threshold and or saturation levels for price discounts for perishable products a potential explanation comes from the observation that although products like desserts on average allow 1 5 weeks time to consume their sales during promotions on average are equal to 14 weeks of regular sales this suggests that the success of a promotion is not so much determined by the restriction to stockpile due to the short time to consume but by the emergence of substitution effects consumers switching between different products of the same category we develop and test different models to forecast the demand during a promotion including a moving average forecast and several regression models within the class of regression models we find that modeling threshold and saturation effects leads to worse forecasting performance than modeling price reductions linearly or quadratically the largest improvements in forecast accuracy are gained by distinguishing between routine and non routine product categories routine categories with routine demand processes and a large number of observations perform best when applying a regression based on direct observations of the product category whilst non routine categories benefit from a regression which also uses observations from other product categories

macroeconomic characteristics and inventory investment a multi country study the paper is a new element in a series of studies analyzing macroeconomic inventory behavior by use of multi country data in this paper seven hypotheses are tested with positive result these hypotheses include subjects like relations of inventories with growth and with some other macroeconomic indicators of the use of gdp and the long term tendencies of global inventory formations multivariate statistical analysis is used for evaluation

the decline in u s output volatility explanations for the decline in u s output volatility since the mid 1980s include better policy good luck and technological change our multiple break estimates suggest that reductions in volatility since the mid 1980s extend not only to manufacturing inventories but also to sales this finding along with a concentration of the reduction in the volatility of inventories in materials and supplies and the lack of a significant break in the inventory sales covariance imply that new inventory technology cannot account for most of the decline in output volatility

the long term effects of youth unemployment using nlsy data we examine the long term effects of youth unemployment on later labor market outcomes involuntary unemployment may yield suboptimal investments in human capital in the short run a theoretical model of dynamic human capital investment predicts a rational catch up response using semiparametric techniques to control for the endogeneity of prior behavior our estimates provide strong evidence of this response we also find evidence of persistence in unemployment combining our semiparametric estimates with a dynamic approximation to the lifecycle we find that unemployment experienced as long ago as ten years continues to affect earnings adversely despite the catch up response

adolescent alcohol use sociability and income as a young adult we use data from the national longitudinal survey of adolescent health add health to study how sociability and adolescent alcohol use impact personal income as a young adult we find that factors which enhance not only individual sociability but also social interaction at the community level are positively linked to future earnings of adolescents adolescents whose friends and friends of friends have greater sociability reap long term labour market rewards into adulthood after adjusting for individual and community sociability the effect of teenage alcohol consumption on labour market earnings as young adults is reduced our results suggest that earnings premiums associated with adolescent alcohol consumption may be partially explained by social network dynamics

macrofinancial imbalances in historical perspective a global crisis index abstract global crisis episodes are rare events that can be properly studied by adopting the long run view of macroeconomic history in this study we explore the strength of the relationship between current account imbalances credit growth and equity returns at global level and document new evidence of a recurring sequencing pattern ahead of global crisis periods where credit booms are preceded by growing external imbalances and crisis episodes occur at the low end of the contraction phase of equity returns we use this information to construct a single aggregate measure with the aim of signaling periods of increasing risk of macroeconomic and financial instability at global level three major crisis episodes are identified with our global crisis index the 1929 crisis the breakdown of the bretton woods system and the recent financial crisis since past global crisis episodes at international level culminated with the collapse of existing international monetary systems the ongoing debate on the reforms needed to enhance the stability of international financial markets indicates the recent global financial crisis as a major turning point in the evolution of the international financial and monetary system

inventory investment and sectoral characteristics in some oecd countries this paper discusses the effects of sectoral structure on the long run macroeconomic inventory behaviour of national economies data on 15 oecd countries are included in the analysis which is based on correlation and cluster analysis methodologies the study is part of a long term research project exploring factors influencing the inventory behaviour of national economies first we introduce some basic characteristics of macroeconomic inventory formation in the 15 oecd countries we argue that our previous results on the existence of specific characteristic features of macroeconomic inventory investment are justified hence it makes sense to study the factors influencing these features we then examine the contribution of various sectors to the production of in the countries involved and the relationship between sectoral structure and inventory intensity annual inventory change gross value added we find that the high share of agriculture and manufacturing increases inventory intensity that the increasing share of services has a negative effect and that the role of construction and trade is not obvious the relatively low stability of the statistical results warns us to be cautious with our judgements further case by case analysis would be required to obtain more solid results

estimates of the returns to schooling from sibling data fathers sons and brothers data on brothers and on fathers and sons from the national longitudinal survey are used to consider the impact of omitted variables and measurement errors on the economic returns to schooling the analysis suggests that the upward bias in estimated returns due to omitted variables is likely offset by an equal downward bias resulting from measurement errors in reported schooling controlling for both of these potential sources of bias yields results comparable to conventional regression estimates of the economic return to schooling

inventory allocation and customer travelling problem in spatial duopoly abstract the paper is a theoretical study about connecting inventory allocation and market area for the goods defined by customers travelling decisions influenced by the expected shortages of goods in the paper inventories in spatial models bogataj international journal of production economics 45 1996 337 342 2 we have emphasized the need for connecting inventory and location analysis this problem was studied further by h j girlich in his paper on the metric transportation problems and their solution girlich lecture notes of the international postgraduate summer school vol 2 1995 pp 13 24 which gives us proper foundations for our present research the study is influenced by grubbstrom and molinder s work on mrp optimization for details see grubbstrom management science 13 7 1967 558 567 grubbstrom the mathematical scientist 16 1991 118 129 grubbstrom international journal of production economics forthcoming grubbstrom international encyclopaedia of business and management 1996 grubbstrom and molinder proceedings of the eight international working seminar on production economics 1994 grubbstrom and molinder international journal of production economics 35 1994 299 31 6 11 the annuity stream approach has been applied in the environment of spatial duopoly where the optimal ordering policy depends on the interaction between the prices and shortages of goods in the studied duopolies customer travelling problem ctp is defined which determines the market area for allocated inventories

leverage and asset bubbles averting armageddon with chapter 11 an iconic model with high leverage and overvalued collateral assets is used to illustrate the amplification mechanism driving asset prices to overshoot equilibrium when an asset bubble bursts threatening widespread insolvency and what richard koo calls a balance sheet recession besides interest rates cuts asset purchases and capital restructuring are key to crisis resolution the usual bankruptcy procedures for doing this fail to internalise the price effects of asset fire sales to pay down debts however we discuss how official intervention in the form of super chapter 11 actions can help prevent asset price correction causing widespread economic disruption

inventory dynamics time lags and efficiency measures abstract standard measures employed to examine efficiency such as production efficiency in manufacturing are static in nature standard methods typically employ a stock flow approach to measure turnover and delay this is a first estimate but an inadequate approach since production processes are time dependent and dynamic this study examines theoretical issues concerning the standard method of measuring efficiency indices and introduces a refined dynamic measurement methodology the standard and proposed methodologies are applied to financial data for us tire and rubber goods industry to demonstrate the empirical differences between the two measures

employment unemployment and problem drinking the misuse of alcohol is estimated to result in enormous economic costs composed largely of reduced labor market productivity however there has been debate on this issue the purpose of this paper is to help to resolve this debate by presenting sound structural estimates of the relationship between measures of problem drinking and of employment and unemployment the analysis is based on the 1988 alcohol supplement of the national health interview survey we find that for both men and women problem drinking results in reduced employment and increased unemployment

alcohol use human capital and wages this article develops and estimates a model of wage determination that isolates the effects of alcohol use on wages as mediated through human capital accumulation although generally insignificant estimation results suggest that moderate alcohol use while in school or working has a positive effect on the returns to education or experience and therefore on human capital accumulation but heavier drinking reduces this gain slightly based on these results alcohol use does not appear to adversely affect returns to education or work experience and therefore has no negative effect on the efficiency of education or experience in forming human capital