AUTOMOBILES AND THE NATIONAL INDUSTRIAL RECOVERY ACT - EVIDENCE ON INDUSTRY COMPLEMENTARITIES

This paper investigates the Automobile Industry code negotiated in 193 3 and modified in 1935 under the National Industrial Recovery Act. The amended code contained a provision calling for automobile producers t o alter the timing of new model introductions and the annual automobil e show as a means of regularizing employment in the industry. Our anal ysis of this period provides evidence against the hypothesis that chan ges in fundamentals led to the dramatic changes in the seasonal patter n of production and sales starting in 1935. Instead, it appears that t he National Industrial Recovery Act succeeded in coordinating activity on an alternative Nash equilibrium.