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Article: Uncertainty, imperfect information, and expectation formation over the firm’s life cycle
| Title | Uncertainty, imperfect information, and expectation formation over the firm’s life cycle |
|---|---|
| Authors | |
| Issue Date | 11-Aug-2023 |
| Publisher | Elsevier |
| Citation | Journal of Monetary Economics, 2023 How to Cite? |
| Abstract | Using a long panel data set on Japanese firms, we find that firms make more precise forecasts and less autocorrelated forecast errors as they gain more experience. Then, we build a firm dynamics model where firms gradually learn about their demand by using a noisy signal. Using expectations data over time, we cleanly isolate the learning mechanism from other mechanisms and find that it accounts for 20%–40% of the overall decline in forecast errors over the life cycle. Productivity gains from removing information frictions range from 3% to 12%, with firm entry and exit playing prominent roles. |
| Persistent Identifier | http://hdl.handle.net/10722/331179 |
| ISSN | 2022 Impact Factor: 4.1 2020 SCImago Journal Rankings: 4.988 |
| DC Field | Value | Language |
|---|---|---|
| dc.contributor.author | Chen, Cheng | - |
| dc.contributor.author | Senga, Tatsuro | - |
| dc.contributor.author | Sun, Chang | - |
| dc.contributor.author | Zhang, Hongyong | - |
| dc.date.accessioned | 2023-09-21T06:53:26Z | - |
| dc.date.available | 2023-09-21T06:53:26Z | - |
| dc.date.issued | 2023-08-11 | - |
| dc.identifier.citation | Journal of Monetary Economics, 2023 | - |
| dc.identifier.issn | 0304-3932 | - |
| dc.identifier.uri | http://hdl.handle.net/10722/331179 | - |
| dc.description.abstract | <p>Using a long panel data set on Japanese firms, we find that firms make more precise forecasts and less autocorrelated forecast errors as they gain more experience. Then, we build a firm dynamics model where firms gradually learn about their demand by using a noisy signal. Using expectations data over time, we cleanly isolate the learning mechanism from other mechanisms and find that it accounts for 20%–40% of the overall decline in forecast errors over the life cycle. Productivity gains from removing information frictions range from 3% to 12%, with firm entry and exit playing prominent roles.</p> | - |
| dc.language | eng | - |
| dc.publisher | Elsevier | - |
| dc.relation.ispartof | Journal of Monetary Economics | - |
| dc.rights | This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. | - |
| dc.title | Uncertainty, imperfect information, and expectation formation over the firm’s life cycle | - |
| dc.type | Article | - |
| dc.identifier.doi | 10.1016/j.jmoneco.2023.08.001 | - |
| dc.identifier.eissn | 1873-1295 | - |
| dc.identifier.issnl | 0304-3932 | - |