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Working Paper
Why are Inventory-Sales Ratios at U.S. Auto Dealerships so High?
Motor vehicle dealerships in the United States tend to hold inventories equivalent to around 65 days? worth of sales, a relatively high level that has been nearly unchanged for 50 years. Despite playing a prominent role in the volatility of U.S. business cycles, very little is known about why the auto industry targets inventory stocks at such a high level. We use a panel of inventory and sales data from 41 vehicle brands over 30 years and the solutions to two well-known inventory planning problems to show that vehicle inventories appear to be related to (1) the size of dealership franchise ...
Working Paper
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, ...
Working Paper
How fast do personal computers depreciate? concepts and new estimates
This paper examines the prices for communications equipment, an important component of information technology. Unlike prices for computers which officially fall sharply every year, the official prices for communications equipment have barely budged over the past decade. This paper combines earlier work on prices for several segments of communications equipment with new results for public exchanges, fiber optic equipment, and modems. The results suggest that prices for communications equipment fall much faster than official statistics would indicate, but not as fast as computers. The results ...
Working Paper
How fast do personal computers depreciate? concepts and new estimates
This paper provides new estimates of depreciation rates for personal computers using an extensive database of prices of used PCs. Our results show that PCs lose roughly half their remaining value, on average, with each additional year of use. We decompose that decline into age-related depreciation and a revaluation effect, where the latter effect is driven by the steep ongoing drop in the constant-quality prices of newly-introduced PCs. Our results are directly applicable for measuring the depreciation of PCs in the National Income and Product Accounts (NIPAs) and were incorporated into the ...
Working Paper
Incentives and prices for motor vehicles: what has been happening in recent years?
We address the construction of price indexes for consumer vehicles using data collected from a national sample of dealerships. The dataset contains highly disaggregate data on actual sales prices and quantities, along with information on customer cash rebates, financing terms, and much more. Using these data, we are able to capture the actual cash and financing incentives taken by consumers, and we demonstrate that their inclusion in measures of consumer vehicle prices is important. We also document other features of retail vehicle markets that interact and overlap with price measurement ...
Working Paper
From Transactions Data to Economic Statistics: Constructing Real-time, High-frequency, Geographic Measures of Consumer Spending
Access to timely information on consumer spending is important to economic policymakers. The Census Bureau's monthly retail trade survey is a primary source for monitoring consumer spending nationally, but it is not well suited to study localized or short-lived economic shocks. Moreover, lags in the publication of the Census estimates and subsequent, sometimes large, revisions diminish its usefulness for real-time analysis. Expanding the Census survey to include higher frequencies and subnational detail would be costly and would add substantially to respondent burden. We take an alternative ...
Discussion Paper
Prices and Depreciation in the Market for Tablet Computers
Spurred by advances in electronic miniaturization and power efficiency, lightweight, powerful and inexpensive tablet computers entered the mass market in significant volumes in 2010. Since that time, sales of tablet computers have increased to account for over half of personal computer (PC) units sold worldwide.
Discussion Paper
The Effect of Sales-Tax Holidays on Consumer Spending
Over the past decade, many U.S. states have enacted policies that temporarily exempt consumer purchases of certain goods from state sales taxes. In this note, we investigate whether the pre-announced sales-tax holidays noticeably alter the spending behavior of consumers. Specifically, we investigate whether there are shifts in the level and/or composition of consumer spending before, during, and after these sales-tax holidays.
Working Paper
Unemployment risk, precautionary saving, and durable goods purchase decisions
In this paper household level data are used to explore whether unemployment risk is an important factor in the timing of consumers' durable goods purchase decisions. A theoretical model is presented in which both income uncertainty and household debt play a direct role, offering a potential explanation for fluctuations in durable goods spending over the business cycle. The model predicts that consumers respond to increases in unemployment risk by postponing purchases of the durable good and reducing their spending on nondurable goods in order to bolster their precautionary buffer-stock of ...
Discussion Paper
From Income to Consumption Inequality? Looking through the Lens of Motor Vehicle Purchases
In this note, we assess the pattern of consumption inequality using an alternative data source--namely, new motor vehicle purchases.