Comparing survey measures of firms’ expectations and uncertainty

Marco Bottone ()
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Marco Bottone: Statistics and Research - Statistical Analysis Directorate

Empirical Economics, 2025, vol. 69, issue 1, No 11, 393-430

Abstract: Abstract I analyze and compare firms’ expectations and uncertainty using both point forecasts and subjective probability distributions, drawing on data from the 2017 Bank of Italy survey of industrial and service firms. I find that, on average, point forecasts are better predictors of future sales than the mean of probability forecasts, which in some cases suffer from firms’ difficulty in correctly eliciting subjective distributions. I also find that different measures of uncertainty lead to significant differences in how firms are ranked from most to least uncertain. Finally, I assess the implications of using various uncertainty measures by examining their heterogeneous impact on investment decisions.

Keywords: Probabilistic questions; Firms’ subjective probabilities; Survey methods (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s00181-025-02725-0

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