The Response of Prices, Sales, and Output to Temporary Changes in Demand

We determine empirically how the Big Three automakers accommodate shocks to demand. They have the capability to change prices, alter labor inputs through temporary layoffs and overtime, or adjust inventories. These adjustments are interrelated, non-convex, and dynamic in nature. Combining weekly plant-level data on production schedules and output with monthly data on sales and transaction prices, we estimate a dynamic profit-maximization model of the firm. Using impulse response functions, we demonstrate that when an automaker is hit with a demand shock sales respond immediately, prices respond gradually, and production responds only after a delay. The size of the immediate sales response is linear in the size of the shock, but the delayed production response is non-convex in the size of the shock. For sufficiently large shocks the cumulative production response over the product cycle is an order of magnitude larger than the cumulative price response. We examine two recent demand shocks: the Ford Explorer/Firestone tire recall of 2000, and the September 11, 2001 terrorist attacks.

The Response of Prices, Sales, and Output to Temporary Changes in Demand

We determine empirically how the Big Three automakers accommodate shocks to demand. They have the capability to change prices, alter labor inputs through temporary layoffs and overtime, or adjust inventories. These adjustments are interrelated, non-convex, and dynamic in nature. Combining weekly plant-level data on production schedules and output with monthly data on sales and transaction prices, we estimate a dynamic profit-maximization model of the firm. Using impulse response functions, we demonstrate that when an automaker is hit with a demand shock sales respond immediately, prices respond gradually, and production responds only after a delay. The size of the immediate sales response is linear in the size of the shock, but the delayed production response is non-convex in the size of the shock. For sufficiently large shocks the cumulative production response over the product cycle is an order of magnitude larger than the cumulative price response. We examine two recent demand shocks: the Ford Explorer/Firestone tire recall of 2000, and the September 11, 2001 terrorist attacks.automobile pricing, inventories, revenue management, indirect inference

Prices, Production and Inventories over the Automotive Model Year

This paper studies the within-model-year pricing and production of new automobiles. Using new monthly data on U.S. transaction prices, we document that for the typical new vehicle, prices fall over the model year at a 9.2 percent annual rate. Concurrently, both sales and inventories are hump shaped. To explain these time series, we formulate a market equilibrium model for new automobiles in which inventory and pricing decisions are made simultaneously. On the demand side, we use micro-level data to estimate time-varying aggregate demand curves for each vehicle. On the supply side, we solve a dynamic programming model of an automaker that, while able to produce only one vintage of a product at a time, may accumulate inventories and consequently sell multiple vintages of the same product simultaneously. The profit maximizing pricing and production strategies under a build-to-stock inventory policy imply declining prices and hump-shaped sales and inventories of the magnitudes observed in the data. Further, roughly half of the price decline is driven by inventory control considerations, as opposed to decreasing demand.

Sing a New Song to the City: Ambient Rhetoric and Urban Hymns

Hymns are a key component of how Christians express their faith. But many of these hymns do represent the rhythms and sensibilities of an older and largely agrarian world. Using the concept of “ambient rhetoric,” Adam Copeland suggests that it is time for other hymns that represent the ethos of daily life in an increasingly urbanized world, hymns that will speak to the realities of urban culture

The Ten Commandments 2.0

Since the Ten Commandments still enjoy a primary place in both church teaching and cultural debate, it will be both helpful and faithful to interpret them anew in the light of our new media and new technologies. Adam Copeland does just that in this article

Estimating Prices for R&D Investment in the 2007 R&D Satellite Account

This paper is part of a series that provides the details behind the Bureau of Economic Analysis's (BEA) satellite account on research and development (R&D) activity. In the current work, the focus is on the theoretical underpinnings and empirical implementation of the R&D price index used to construct real R&D output. We examine four alternative price indexes. For each, we lay out the theoretical assumptions needed for the approach to be valid and examine how well the approach works in practice. We then compare these four alternative price indexes and explain the choice of our preferred price index.

Athletic Disobedience: Providing a Context for Analysis of Colin Kaepernick’s Protest

The interface between sport and political protest is not a new phenomenon. New iterations and new debates have arisen recently. Colin Kaepernick, backup quarterback for the San Francisco 49ers, found a powerful and controversial form of political action when he decided to sit for the playing of the national anthem prior to a preseason game on August 26, 2016. Kaepernick did this to draw greater attention to police violence against black and brown people in the United States. The story gained traction in the media, spurring on a renewed discussion about the intersection between athletics, Americanism, protest, and race. This paper will provide an overview of the Kaepernick protest, analyzing it through historical, sociological, and philosophical lenses. The specifics of the protest will be presented, including important interpretations of the protest, in order to show the debates that frame the prevailing ideas about how athletes like Kaepernick should behave. Following the introduction of relevant interpretations of the protest, historical ties will be made to earlier protests that will better situate Kaepernick’s protest. After the protest is historically situated, a number of philosophic principles that scholars should consider when thinking about Kaepernick’s protest will be introduced. Ultimately, the goal of this paper is to offer an informative foundation from which other scholarly interpretations and arguments can be made and which other scholars can reference