Arbeitspapier
Growth Expectations, Undue Optimism, and Short-Run Fluctuations
We assess the contribution of undue optimism (Pigou) to short-run fluctuations. In our analysis, optimism pertains to total factor productivity which determines economic activity in the long run, but is not contemporaneously observed by market participants. In order to recover optimism shocks - autonomous, but fundamentally unwarranted changes in the assessment of productivity - from actual time series, we rely on an informational advantage over market participants. Specifically, we compute the nowcast error regarding current output growth drawing on the Survey of Professional Forecasters. Including nowcast errors in a vector autoregression model makes it possible to identify optimism shocks. Optimism shocks, in line with theory, induce a negative nowcast error but raise economic activity in the short run. They account for up to 30 percent of short-run fluctuations.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 4548
- Klassifikation
-
Wirtschaft
Business Fluctuations; Cycles
- Thema
-
undue optimism
optimism shocks
noise shocks
animal spirits
business cycles
nowcast errors
VAR
long-run restrictions
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Enders, Zeno
Kleemann, Michael
Müller, Gernot
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2013
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:46 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Enders, Zeno
- Kleemann, Michael
- Müller, Gernot
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2013
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