scholarly journals Demand Volatility, Adjustment Costs, and Productivity: An Examination of Capacity Utilization in Hotels and Airlines

2017 ◽  
Author(s):  
R. Andrew Butters
Keyword(s):  
Capacity Utilization ◽  
Adjustment Costs ◽  
Demand Volatility

scholarly journals Demand Volatility, Adjustment Costs, and Productivity: An Examination of Capacity Utilization in Hotels and Airlines

2020 ◽  
Vol 12 (4) ◽  
pp. 1-44
Author(s):  
R. Andrew Butters
Keyword(s):  
Capacity Utilization ◽  
Adjustment Costs ◽  
Adjustment Cost ◽  
Large Share ◽  
Metro Area ◽  
Load Factors ◽  
Demand Volatility ◽  
Factors Of Production ◽  
Occupancy Rates

Measures of productivity reveal large differences across producers even within narrowly defined industries. Traditional measures of productivity, however, will associate differences in demand volatility to differences in productivity when adjusting factors of production is costly. I document this effect by comparing the influence of demand volatility on capacity utilization in a high (hotels) and low (airlines) adjustment cost industry. Differences in annual demand volatility explain a large share of the variation in occupancy rates of hotels at the metro area–segment-year level. In contrast, differences in annual demand volatility have no effect on load factors of airlines at the destination-airline-year level. (JEL D24, L83, L93)

INDETERMINACY IN CASH-IN-ADVANCE MODELS AND THE ROLE OF FRICTIONS

2009 ◽  
Vol 14 (1) ◽  
pp. 119-135 ◽  
Author(s):  
Koray Akay
Keyword(s):  
Habit Formation ◽  
Capacity Utilization ◽  
Adjustment Costs ◽  
New Keynesian ◽  
Elasticity Of Substitution ◽  
Variable Capacity ◽  
Model Features ◽  
Real Indeterminacy ◽  
Cash In Advance

A monetary cash-in-advance model is known to be prone to real indeterminacy if the intertemporal elasticity of substitution in consumption is sufficiently low. Moreover, if the model features habit formation in consumption, the scope of indeterminacy increases substantially. This paper shows that many of the nominal frictions and real rigidities commonly used in the New Keynesian paradigm act to decrease the scope of this indeterminacy. These frictions include stickiness in prices and wages, adjustment costs in investment, and variable capacity utilization. When they are all used together in the model, the problem of indeterminacy nearly vanishes, even when habit formation in consumption is allowed.

scholarly journals THE ROLE OF INVESTMENT-SPECIFIC TECHNOLOGY SHOCKS IN DRIVING INTERNATIONAL BUSINESS CYCLES: A BAYESIAN APPROACH

2016 ◽  
Vol 21 (3) ◽  
pp. 555-598 ◽  
Author(s):  
Jaya Dey
Keyword(s):  
Bayesian Approach ◽  
Negative Correlation ◽  
Marginal Likelihood ◽  
Capacity Utilization ◽  
Adjustment Costs ◽  
Wealth Effects ◽  
International Business Cycles ◽  
Variable Capacity ◽  
Specific Technology ◽  
Country Specific

This paper uses a Bayesian approach to estimate a standard international real business cycle model augmented with preferences with zero wealth effect, variable capacity utilization, and investment adjustment costs. First, I find that the bulk of fluctuations in country-specific outputs, consumption, investments, and international relative prices can be attributed to country-specific neutral technology, investment-specific technology, and preference shocks. Second, my estimated model with economically meaningful shocks simultaneously accounts for the negative correlation between the real exchange rate and relative consumption and the negative correlation between the terms of trade and relative output. Last, through a marginal likelihood comparison exercise, I find that the success of the model depends on preferences with zero wealth effects; other frictions and alternative asset market structures play a less important role.

scholarly journals Measuring TFP: The Role of Profits, Adjustment Costs, and Capacity Utilization

2020 ◽  
Author(s):  
Diego Comin ◽  
Javier Quintana Gonzalez ◽  
Tom Schmitz ◽  
Antonella Trigari
Keyword(s):  
Capacity Utilization ◽  
Adjustment Costs

Measuring TFP: The Role of Profits, Adjustment Costs, and Capacity Utilization

2020 ◽  
Author(s):  
Diego Comin ◽  
Javier Quintana ◽  
Tom Schmitz ◽  
Antonella Trigari
Keyword(s):  
Capacity Utilization ◽  
Adjustment Costs

The Micro and Macro of Managerial Beliefs

2020 ◽  
Author(s):  
Jose Maria Barrero
Keyword(s):  
Rational Expectations ◽  
Asset Price ◽  
Heterogeneous Firms ◽  
Adjustment Costs ◽  
Consumer Welfare ◽  
Sales Growth ◽  
Firm Level ◽  
Managerial Decisions ◽  
Managerial Beliefs ◽  
Growth Volatility

This paper studies how biases in managerial beliefs affect managerial decisions, firm performance, and the macroeconomy. Using a new survey of US managers I establish three facts. (1) Managers are not over-optimistic: sales growth forecasts on average do not exceed realizations. (2) Managers are overprecise (overconfident): they underestimate future sales growth volatility. (3) Managers overextrapolate: their forecasts are too optimistic after positive shocks and too pessimistic after negative shocks. To quantify the implications of these facts, I estimate a dynamic general equilibrium model in which managers of heterogeneous firms use a subjective beliefs process to make forward-looking hiring decisions. Overprecision and overextrapolation lead managers to overreact to firm-level shocks and overspend on adjustment costs, destroying 2.1 percent of the typical firm’s value. Pervasive overreaction leads to excess volatility and reallocation, lowering consumer welfare by 0.5 to 2.3 percent relative to the rational expectations equilibrium. These findings suggest overreaction may amplify asset-price and business cycle fluctuations.

Forward trading and adjustment costs in Cournot markets

2000 ◽  
Vol 37 (1) ◽  
pp. 177-195 ◽  
Author(s):  
Henry Thille ◽  
Margaret E. Slade
Keyword(s):  
Adjustment Costs ◽  
Forward Trading
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