Wheatering tight economic times: the sales evolution of consumer durables over the business cycle.

Despite its obvious importance, not much marketing research focuses on how business-cycle fluctuations affect individual companies and/or industries. Often, one only has aggregate information on the state of the national economy, even though cyclical contractions and expansions need not have an equal impact on every industry, nor on all firms in that industry. Using recent time-series developments, we introduce various measures to quantify the extent and nature of business-cycle fluctuations in sales. Specifically, we discuss the notions of cyclical volatility and cyclical comovement, and consider two types of cyclical asymmetry related, respectively, to the relative size of the peaks and troughs and the rate of change in upward versus downward parts of the cycle. In so doing, we examine how consumers adjust their purchasing behavior across different phases of the business cycle. We apply these concepts to a broad set (24) of consumer durables, for which we analyze the cyclical sensitivity in their sales evolution. In that way, we (i) derive a novel set of empirical generalizations, and (ii) test different marketing theory-based hypotheses on the underlying drivers of cyclical sensitivity. Consumer durables are found to be more sensitive to business-cycle fluctuations than the general economic activity, as expressed in an average cyclical volatility of more than four times the one in GNP, and an average comovement elasticity in excess of 2. This observation calls for an explicit consideration of cyclical variation in durable sales. Moreover, even though no evidence is found for depth asymmetry, the combined evidence across all durables suggests that asymmetry is present in the speed of up- and downward movements, as durables' sales falls much quicker during contractions than recover during economic expansions. Finally, key variables related to the industry's pricing activities, the nature of the durable (convenience vs. leisure), and the stage in a product's life cycle tend to moderate the extent of cyclical sensitivity in durable sales patterns.Business cycles; Companies; Consumer durables; Econometrics; Economy; Firms; Hypotheses; Industry; Information; Market; Marketing; Pricing; Product; Purchasing; Sales; Sales evolution; Sensitivity; Size; Time; Time-series econometrics; Time series; Variables; Volatility;

From cycles to shocks: progress in business-cycle theory

Boom leads to recession, recession to boom, and the economy is caught in a self-sustaining cycle. Or is it? More recent economic theory states that cyclical fluctuations in the economy are caused by shocks and other disturbances that continually buffet the economy. In this article, Satyajit Chatterjee examines the historical process by which the explanation of fluctuations in the economy has evolved from a theory of cycles to one of shocks.Business cycles

Political Economy : Variability and Consistency in the Development of Worker Owned Cooperatives

The relationship between worker cooperatives and their social and economic environment has sparked interest among the sociological community for the contradictions and harmony typical of these interactions. However, these studies do not examine how firm behavior varies and/or remains constant in different social conditions. With insights from economic sociology, neo-institutionalism, and social movements theory, the paper pursues this issue by answering the following question: how do worker cooperatives respond to different social conditions over time? Using interviews with members of eight worker cooperatives in a Midwestern metropolitan area, the author compares behavior in older and younger cooperatives to observe similarities and differences in their practices under different social conditions. The analysis demonstrates that differences in social support and market competition created variation among older and newer cooperatives. For instance, the decision to start worker-owned cooperatives reflected different political motivations that emerged from distinct socio-economic conditions. However, all firms eventually behaved like businesses because they framed economic activities as political activism, exposing them to fluctuations in the city’s political scene. As a result, these businesses created market niches, attract customers and competent workers, and copy other successful democratic enterprises to survive demographic fluctuations in the market

A primer on the nature of business cycles

Discussions of the effects of monetary and fiscal policy sometimes center on the impact of such policies in ameliorating fluctuations associated with the business cycle. However, though familiar with the term "business cycle," many people are not aware of what it refers to exactly. In this article, Gregory Huffman presents an explanation of the term and provides a detailed illustration of post-World War II U.S. business cycles. He also contrasts the behavior of various U.S. economic time series over the business cycle with similar Canadian statistics and points out some apparent anomalies in the data.Business cycles ; Monetary policy ; Time-series analysis

Weathering Tight Economic Times: The Sales Evolution Of Consumer Durables Over The Business Cycle

Despite its obvious importance, not much marketing research focuses on how business-cycle fluctuations affect individual companies and/or industries. Often, one only has aggregate information on the state of the national economy, even though cyclical contractions and expansions need not have an equal impact on every industry, nor on all firms in that industry. Using recent time-series developments, we introduce various measures to quantify the extent and nature of business-cycle fluctuations in sales. Specifically, we discuss the notions of cyclical volatility and cyclical comovement, and consider two types of cyclical asymmetry related, respectively, to the relative size of the peaks and troughs and the rate of change in upward versus downward parts of the cycle. In so doing, we examine how consumers adjust their purchasing behavior across different phases of the business cycle. We apply these concepts to a broad set (24) of consumer durables, for which we analyze the cyclical sensitivity in their sales evolution. In that way, we (i) derive a novel set of empirical generalizations, and (ii) test different marketing theory-based hypotheses on the underlying drivers of cyclical sensitivity. Consumer durables are found to be more sensitive to business-cycle fluctuations than the general economic activity, as expressed in an average cyclical volatility of more than four times the one in GNP, and an average comovement elasticity in excess of 2. This observation calls for an explicit consideration of cyclical variation in durable sales. Moreover, even though no evidence is found for depth asymmetry, the combined evidence across all durables suggests that asymmetry is present in the speed of up- and downward movements, as durable sales fall much quicker during contractions than they recover during economic expansions. Finally, key variables related to the industry's pricing activities, the nature of the durable (convenience vs. leisure), and the stage in a product's life cycle tend to moderate the extent of cyclical sensitivity in durable sales patterns