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The channel of monetary transmission to demand: evidence from the market for automobile credit
In response to tight money, both consumer loans and consumption fall. In this paper, I ask whether there is any causality running from loans to consumption by focusing on hw the composition of automobile finance between bank and nonbank sources of credit changes in response to unanticipated innovations in monetary policy. The results indicate that contractionary monetary policy reduces the supply of bank consumer loans, which in turn produces a decline in real consumption. The evidence is therefore supportive of a credit channel theory of monetary transmission to aggregate consumption. ...
The replacement demand for motor vehicles: evidence from the Survey of Consumer Finances
The motor vehicle industry has undergone important changes in recent years, including a shift in production from autos to light trucks and growth of vehicle leasing. This paper uses household-level data from the Federal Reserve's Survey of Consumer Finances to document changes in households' acquisitions and financing of motor vehicles from 1989 to 2001. We examine what types of vehicles households had, what financing arrangements were used to acquire them, and how vehicle holdings vary with such household characteristics as income, age, wealth, and creditworthiness. The data provide useful ...
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 typically 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, ...
Exchange rate pass-through, markups, and inventories
A large body of research has established that exporters do not fully adjust their prices across countries in response to exchange rate movements, but instead allow their markups to vary. But while markups are difficult to observe directly, we show in this paper that inventory-sales ratios provide an observable counterpart. We then find evidence that inventory-sales ratios of imported vehicles respond to exchange rate movements to a degree consistent with pass-through on the order of 50 to 75 percent, on the high end of the range found in the literature.
Detroit back from the brink? auto industry crisis and restructuring 2008–11
While it is hard to say how much of the current auto sector recovery is attributable to government intervention, the ensuing restructuring of the Detroit Three has substantially changed the industry in the U.S.
Vehicle sales in 2003: a good down-year
Whose part is it? - Measuring domestic content of vehicles
Today, the distinction between ?American? and ?foreign? vehicles is not so clear: Some models produced by the American-owned Detroit Three carmakers have a smaller share of domestic parts than models produced by foreign-owned carmakers. This article examines how much domestic content goes into motor vehicles sold in the U.S.
Economy in lower gear through 2008
According to participants in the Chicago Fed's annual Automotive Outlook Symposium, the nation's economic growth in 2008 is forecasted to be slower than in 2007, with inflation staying high and the unemployment rate rising. Light vehicle sales are predicted to fall sharply this year and then improve in 2009.
Recent developments in automobile finance