How Do Firms Form Expectations of Aggregate Growth? New Evidence from a Large-Scale Business Survey

Dovern J, Müller LS, Wohlrabe K (2020)

Publication Language: English

Publication Type: Other publication type

Publication year: 2020

Series: CESifo Working Papers

City/Town: Munich

Pages Range: 30

Article Number: 8179

URI: https://www.cesifo.org/en/publikationen/2020/working-paper/how-do-firms-form-expectations-aggregate-growth-new-evidence-large

DOI: 10.2139/ssrn.3564860

Abstract

Expectations are highly relevant for macroeconomic dynamics. Yet, the empirical evidence about properties of corporate macroeconomic expectations is scarce. Using new survey data on quantitative growth expectations of firms in Germany, we show that expectations are highly dispersed. The degree of dispersion depends on firm size and on how important the general economy is for the business of firms, supporting theories of rational inattention. Firms seem to extrapolate from local economic conditions and business experiences to aggregate growth expectations. Differences in growth expectations are associated with differences in firms’ investment and labor demand.

Authors with CRIS profile

Jonas Dovern Lehrstuhl für Statistik und Ökonometrie

Related research project(s)

Heterogenität makroökonomischer Erwartungen: Welche Rolle spielen individuelle historische Erfahrungen, das örtliche Umfeld und sozioökonomische Faktoren? July 1, 2019 - Dec. 31, 2022

Involved external institutions

ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München e. V. / ifo Institute – Leibniz Institute for Economic Research at the University of Munich DE Germany (DE)

How to cite

APA:

Dovern, J., Müller, L.S., & Wohlrabe, K. (2020). How Do Firms Form Expectations of Aggregate Growth? New Evidence from a Large-Scale Business Survey. Munich.

MLA:

Dovern, Jonas, Lena Sophia Müller, and Klaus Wohlrabe. How Do Firms Form Expectations of Aggregate Growth? New Evidence from a Large-Scale Business Survey. Munich, 2020.

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