Can firms see into the future? Survey evidence from Germany
- This paper presents new evidence on the expectation formation process of firms from a survey of the German manufacturing sector. It focuses on the expectation about their future business conditions, which enters the widely followed economic sentiment index and which is an important determinant of their employment and investment decisions. We find that firms extrapolate their experience too much and make predictable forecasting errors. Moreover, firms do not seem to anticipate the upcoming reversals of business cycle peaks and troughs which causes suboptimal adjustment of investment and employment and affects their inventories and profits. However, the impact on expectation errors decreases with the size and the age of the firm as firms learn to reduce their extrapolation bias over time.
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| Verfasserangaben: | Baptiste Massenot, Yuri Pettinicchi |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-451066 |
| URL: | https://ssrn.com/abstract=3071576 |
| Titel des übergeordneten Werkes (Englisch): | SAFE working paper series ; No. 187 |
| Schriftenreihe (Bandnummer): | SAFE working paper (187) |
| Verlag: | SAFE |
| Verlagsort: | Frankfurt am Main |
| Dokumentart: | Arbeitspapier |
| Sprache: | Englisch |
| Jahr der Fertigstellung: | 2017 |
| Jahr der Erstveröffentlichung: | 2017 |
| Veröffentlichende Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Datum der Freischaltung: | 21.11.2017 |
| Freies Schlagwort / Tag: | Expectation Error; Expectation Formation; Experience; Extrapolation; Learning |
| Ausgabe / Heft: | November 3, 2017 |
| Seitenzahl: | 33 |
| HeBIS-PPN: | 424242397 |
| Institute: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
| Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF) | |
| Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
| Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE) | |
| DDC-Klassifikation: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Lizenz (Deutsch): |  Deutsches Urheberrecht |
