The Decline in U.S. Output Volatility: Structural Changes and Inventory Investment
Authors: Herrera, Ana María1; Pesavento, Eelena2
Source: Journal of Business & Economic Statistics, Volume 23, Number 4, October 2005 , pp. 462-472(11)
Publisher: American Statistical Association
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Abstract:
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.Keywords: GROSS DOMESTIC PRODUCT VARIANCE; STRUCTURAL BREAK
Document Type: Research article
DOI: 10.1198/073500104000000596
Affiliations: 1: Department of Economics, Michigan State University, East Lansing, MI 48824 2: Department of Economics, Emory University, Atlanta, GA 30322
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