Growth expectations, undue optimism, and short-run fluctuations

Konferenzbeitrag

Expectations matter for economic activity. To the extent that they are fundamentally unwarranted, they represent "undue optimism or pessimism" (Pigou, 1927). In this paper, we identify empirically the effect of undue optimism/pessism ("optimism shocks") on economic activity. In a first step, we compute an expectation error regarding current economic activity: the difference of the Ifo index of economic activity and its consensus forecast, compiled simultaneously and independently. The resulting "Ifo innovations" may represent either fundamental innovations or optimism shocks. In a second step, we impose long-run restrictions on a VAR model to disentangle the effects of both shocks. We find that optimism shocks - in line with theory - reduce Ifo innovations, but raise economic activity. They account for up to 30% of short-run fluctuations in industrial production.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2013: Wettbewerbspolitik und Regulierung in einer globalen Wirtschaftsordnung - Session: Expectation and Fluctuations ; No. C21-V1

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Business Fluctuations; Cycles ; Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) ; Business Fluctuations; Cycles

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Enders, Zeno ; Kleemann, Michael ; Müller, Gernot
• Ereignis: Veröffentlichung
• (wer): ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
• (wo): Kiel und Hamburg
• (wann): 2013

Weitere Informationen

• Handle: http://hdl.handle.net/10419/80009
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ