Showing 1 - 10 of 35
Persistent link: https://www.econbiz.de/10012990458
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...
Persistent link: https://www.econbiz.de/10010224834
Persistent link: https://www.econbiz.de/10009667707
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...
Persistent link: https://www.econbiz.de/10010342128
Persistent link: https://www.econbiz.de/10008906902
Persistent link: https://www.econbiz.de/10011389201
Membership in a currency union is not irreversible. Exit expectations may emerge during sovereign debt crises, because exit allows countries to reduce their liabilities through a currency redenomination. As market participants anticipate this possibility, sovereign debt crises intensify. We...
Persistent link: https://www.econbiz.de/10011410602
We assess how survey expectations impact production and pricing decisions on the basis of a large panel of German firms. We identify the causal effect of expectations by matching firms with the same fundamentals but different views about the future. The probability to raise (lower) production is...
Persistent link: https://www.econbiz.de/10012001909
Persistent link: https://www.econbiz.de/10011550995
We assess whether "undue optimism" (Pigou) contributes to business cycle fluctuations. In our analysis, optimism (or pessimism) pertains to total factor productivity which determines economic activity in the long run. Optimism shocks are perceived changes in productivity which do not actually...
Persistent link: https://www.econbiz.de/10011649164