A Structural Analysis of Expectation Formation: Based on Business Surveys of French Manufacturing Industry

by Marc Ivaldi

Overview

Using panel data of individual firms drawn from French surveys, a structural analysis is developed to study the formation of production plans and the rationality of expectations. The production decision of a firm is defined as the optimal solution of a dynamic shastic optimization problem. The empirical work amounts to recovering the structural parameters characterizing the model of the firm from estimates of the derived decision rule. The preceding analysis of production plans is based on the assumption that firms are rational. To justify this assumption, direct tests offer evidence that the Rational Expectations Hypothesis may not be rejected for quantity variables.

Product Details

ISBN-13:	9783540536659
Publisher:	Springer Berlin Heidelberg
Publication date:	04/08/1991
Series:	Lecture Notes in Economics and Mathematical Systems , #354
Edition description:	Softcover reprint of the original 1st ed. 1991
Pages:	230
Product dimensions:	6.69(w) x 9.61(h) x 0.02(d)

Table of Contents

One Forecasting Production Behavior in the Short-Run.- 1: The Production Smoothing Model.- 2: The Econometric Specification Using Survey Data.- 3: The General Latent Variable Model with Discrete Data.- 4: The Empirical Analysis and Forecasting.- Two Survey Evidence on the Rationality of Expectations.- 5: On Testing the RE Hypothesis: A Survey.- 6: Surprise Variables and Expectational Errors.- 7: Direct Tests of the Rational Expectation Hypothesis.- Conclusion.- References.