Subjective uncertainty, expectations, and firm behavior

Arbeitspapier

Based on a new survey question in a large and representative panel of German firms, this paper introduces a novel measure of managers' subjective uncertainty. I compare this measure of business uncertainty to respondents' business expectations and document a strong negative relationship. However, the link is much weaker in bad times, since uncertainty is then persistently high - even when expectations are favorable. I continue by investigating the relative importance of uncertainty and expectations for corporate decisions. Exploiting information on firms' investment and labor reactions to the COVID-19 crisis, I do not find evidence that uncertainty induced "wait and see" behavior. However, a deterioration in managers' expectations and in their assessment of their firms' business situation predicts investment deferral and a reduction in employment.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: ifo Working Paper ; No. 349

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Survey Methods; Sampling Methods ; Firm Behavior: Empirical Analysis ; Expectations; Speculations ; Business Fluctuations; Cycles ; Macro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy‡
• Thema: subjective uncertainty ; expectations ; firms ; survey data ; corporatedecisions ; business cycles

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Lautenbacher, Stefan
• Ereignis: Veröffentlichung
• (wer): ifo Institute - Leibniz Institute for Economic Research at the University of Munich
• (wo): Munich
• (wann): 2021

Weitere Informationen

• Handle: http://hdl.handle.net/10419/233024
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ