The response of capital goods shipments to demand over the business cycle |
| |
Affiliation: | 1. Erasmus School of Economics, Erasmus University Rotterdam, P.O. Box 1738, Rotterdam, 3000DR, The Netherlands;2. Nyenrode Business Universiteit, Staatweg 25, Breukelen, 3621BG, The Netherlands |
| |
Abstract: | We study how producers of capital goods set shipments in response to fluctuations in new orders. We find that shipments respond more to orders when new orders fall below a certain level relative to shipments, usually after orders plunge in recessions. This cyclical change in producers’ behavior accounts for a considerable portion of the downturn in equipment investment in the 2001 and 2008–9 recessions. A simple model of production to order suggests that heightened persistence in new orders growth may explain the greater responsiveness of shipments, as may increases in the producers’ target delivery lag. |
| |
Keywords: | Shipments Orders Business investment Business cycles Threshold cointegration Markov-switching models E22 E23 E32 |
本文献已被 ScienceDirect 等数据库收录! |
|