Local information and firm expectations about aggregates

Jonas Dovern, Lena Sophia Müller and Klaus Wohlrabe

Journal of Monetary Economics, 2023, vol. 138, issue C, 1-13

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.

Keywords: GDP expectations; Expectation heterogeneity; Disagreement; Rational inattention; ifo business tendency survey (search for similar items in EconPapers)
JEL-codes: D84 E2 E32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304393223000326
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Local Information and Firm Expectations about Aggregates (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:138:y:2023:i:c:p:1-13

DOI: 10.1016/j.jmoneco.2023.03.005

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().