Abstract Dovern
Using new survey data on quantitative growth expectations of firms in Germany, we show that expectations are highly dispersed. The degree of dispersion depends on firm size and how important the general economy is for the business of firms. Furthermore, we show that local economic conditions, the business situation of firms, and their subjective assessment of business uncertainty explain some of the variation of expectations across firms. There is also tentative evidence that firms which experienced a severe crisis at some point in the past tend to have more pessimistic growth expectations today. Our results provide new insights about how growth expectations of firms are formed and are informative for the development of macroeconomic models that feature more realistic mechanisms of expectation formation.
