Testing the rationality of price expectations for manufacturing firms

TL;DR: This article revisited survey evidence about firm expectations, with a particular focus on firms' production and prices, and synthesized the evidence established on the basis of various firm surveys from different countries.

TL;DR: In this paper, the authors used qualitative monthly survey responses by a large number of individual manufacturing firms to questions concerning their own expected and current business conditions to test the implications of rationality by use of survey data.

Abstract: The way in which economic agents respond to unexpected changes to demand is a central issue in contemporary business cycle theories. Although several empirical papers have used macro data to evaluate this issue there are very few results available that have used direct measures of expectation errors from micro panel data. This paper uses micro panel data from a New Zealand quarterly tendency survey to derive expectation errors for nine variables over an unusually long period of 24 years. A vector-autoregressive model is estimated and used to simulate the dynamic reaction of manufacturers to surprising changes to demand. Unexpected changes to demand are important in explaining unplanned changes in output, inventories, employment and labor turnover. Selling price and cost expectation errors are not particularly sensitive to surprising changes to demand. Copyright 1991 by Blackwell Publishing Ltd

TL;DR: In this paper, the authors outline a method of simulating the obsolescence of technologies when they become uncompetitive, and develop a method to simulate the behaviour of businesses and consumers when they have expectations of their future emissions costs.

TL;DR: In this article, a number of alternative measures are considered, almost all based upon a probabilistic model for activity to which the cross-classification may typically lead, and only the case in which the population is completely known is considered, so no question of sampling or measurement error appears.

TL;DR: In this paper, the authors investigated empirical evidence on the structure of price expectations in the United States during the post-Korean War period using semiannual data which describe price expectations for six months and twelve months ahead.