Economic fluctuations and growth.

• Position: Bureau News - Analysis

The NBER's Program on Economic Fluctuations and Growth met in San Francisco on February, 6. The meeting organizers were Ricardo J. Caballero, NBER and MIT, and Peter J. Klenow, Federal Reserve Bank of Minneapolis. The program was:

Valerie A. Ramey, NBER and University of California, San Diego, and Daniel J. Vine, Federal Reserve Board, "Tracking the Source of the Decline in GDP Volatility: An Analysis of the Automobile Industry" Discussant: Mark W. Watson, NBER and Princeton University

Paul Beaudry, NBER and University of British Columbia, and Franck Portier, University of Toulouse, "Stock Prices, News, and Economic Fluctuations" Discussant: Robert E. Hall, NBER and Stanford University

Fernando A. Broner, University of Maryland, "Discrete Devaluations and Multiple Equilibria in a First Generation Model of Currency Crises" Discussant: Varadarajan V. Chari, NBER and University of Minnesota

Mark Aguiar, University of Chicago, and Erik Hurst, NBER and University of Chicago, "Consumption vs. Expenditure" Discussant: Mark Bils, NBER and University of Rochester

Ricardo Lagos, Federal Reserve Bank of Minneapolis, and Randall Wright, NBER and University of Pennsylvania, "A Unified Framework for Monetary Theory and Policy Analysis" Discussant: Narayana Kocherlakota, NBER and Stanford University

Benjamin F. Jones, Northwestern University, and Benjamin A. Olken, Harvard University, "Do Leaders Matter? National Leadership and Growth since World War II" Discussant: Charles I. Jones, NBER and University of California, Berkeley

Ramey and Vine seek to shed light on the source of the decline in U.S. GDP volatility by studying the microeconomic behavior of plants in the U.S. automobile industry, where the changes in volatility have mirrored those of the aggregate data. They find that changes in the relative volatility of sales and output, which have been interpreted by some as evidence of improved inventory management, are in fact the result of changes in the process driving automobile sales. Using a new dataset that tracks the production and sales of motor vehicles by assembly plant and by model, Ramey and Vine first show that the autocorrelation of sales dropped markedly during the 1980s. A simulation of the assembly plants' cost function illustrates that the persistence of sales is a key determinant of output volatility. A comparison of the ways in which assembly plants scheduled production in the 1990s relative to the 1970s supports the intuition of the...