Local Information and Firm Expectations about Aggregates

Dovern J, Müller L, Wohlrabe K (2023)

Publication Type: Journal article, Original article

Publication year: 2023


Book Volume: 138

Pages Range: 1-13

DOI: 10.1016/j.jmoneco.2023.03.005


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.

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Dovern, J., Müller, L., & Wohlrabe, K. (2023). Local Information and Firm Expectations about Aggregates. Journal of Monetary Economics, 138, 1-13. https://doi.org/10.1016/j.jmoneco.2023.03.005


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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