Expectation errors, uncertainty, and economic activity

Yavuz Arslan, Aslihan Atabek Demi̇rhan (), Timur Hulagu and Saygın Şahinöz
Authors registered in the RePEc Author Service: Saygin Cevik

Oxford Economic Papers, 2015, vol. 67, issue 3, 634-660

Abstract: In this article we analyse the relationship between uncertainty and economic activity. For this purpose, we use a firm-level panel data set from Turkey to form proxies for uncertainty by using expectation errors of firms about their production volumes. The identifying assumption is that the probability of making an expectation error increases when the uncertainty faced increases. An analysis of the downturn in 2008–2009 shows that 44% of the decline in industrial production can be attributed to increased uncertainty. Moreover, we show that if a firm faces higher uncertainty it is more likely that it defers its investment plans.

Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
http://hdl.handle.net/10.1093/oep/gpv003 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Expectation Errors, Uncertainty And Economic Activity (2011)
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:oup:oxecpp:v:67:y:2015:i:3:p:634-660.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Oxford Economic Papers is currently edited by James Forder and Francis J. Teal

More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().