Local Information and Firm Expectations about Aggregates

Dovern J, Müller L, Wohlrabe K (2023)

Publication Type: Journal article, Original article

Publication year: 2023

Journal

Journal of Monetary Economics Elsevier

Book Volume: 138

Pages Range: 1-13

DOI: 10.1016/j.jmoneco.2023.03.005

Abstract

Using new survey data on quantitative growth expectations of firms in Germany, we show that firms resort to local information when forming expectations about aggregate growth. Firms extrapolate from the economic situation in their county, industry growth and their individual business situation. Variables (fixed effects) measuring local signals account for up to 26 % (47 %) of the expectation dispersion across firms. The effect is particularly strong for small firms. Our results confirm predictions of theoretical models with rational inattention.

Authors with CRIS profile

Jonas Dovern Lehrstuhl für Statistik und Ökonometrie Lena Bjerkander 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., & Wohlrabe, K. (2023). Local Information and Firm Expectations about Aggregates. Journal of Monetary Economics, 138, 1-13. https://dx.doi.org/10.1016/j.jmoneco.2023.03.005

MLA:

Dovern, Jonas, Lena Müller, and Klaus Wohlrabe. "Local Information and Firm Expectations about Aggregates." Journal of Monetary Economics 138 (2023): 1-13.

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