AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
Measuring the Average Period of Production
AEA Papers and Proceedings
(pp. 624–30)
Abstract
Building on Böhm-Bawerk (1889), we propose a measure of the average period of production defined as a weighted average temporal distance between the time at which a firm employs its inputs and the time at which these inputs deliver finished goods to consumers. Under stationarity conditions, this measure corresponds to the ratio of a firm's total inventories to the cost of the goods it sells in a given period. Using data from publicly traded companies, we compute this measure for various industries and countries and show that, consistent with theory, it is lower the higher is the cost of capital.Citation
Antràs, Pol, and Vitalii Tubdenov. 2025. "Measuring the Average Period of Production." AEA Papers and Proceedings 115: 624–30. DOI: 10.1257/pandp.20251090Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D25 Intertemporal Firm Choice: Investment, Capacity, and Financing
- G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
- L60 Industry Studies: Manufacturing: General