INTERNATIONAL CYCLES

We study twenty years of monthly production data for 11 manufacturing industries in 19 countries. Using the fact that in some countries prod uction virtually shuts down for one summer month, together with the di fferences in the timing of aggregate cyclical fluctuations, we are abl e to learn about the cost structure of different industries. Our prima ry finding is that during a boom year summer shut-downs are shorter. R ather than increasing production further during the rest of the year, producers reallocate activity from high output months to low output mo nths. We also find that there are important seasonal/cyclical interact ions common to all industries within a given country, and that these c ountry effects are larger than the pure industry effects. The correlat ion of the cross-country differences with measures of taxation and lab or market structure suggests the possibility that differences in the w illingness (and ability) to substitute labor intertemporally are respo nsible for the variation.