Nuremberg Research Seminar in Economics on 11 January 2023 – Room 0.423

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You are invited to join the weekly Nuremberg Research Seminar in Economics on 11 January 2023, from 13.15 to 14.45 pm. The seminar will be held in room LG 0.423. Zeno Enders (University of Heidelberg) will be talking about „Firm Expectations and News: Micro v Macro”.

More information can be found here:

In this study, we investigate how firm expectations about their own developments respond to different types of news. We classify news as either micro or macro, with micro news being information about firm-specific developments and macro news being information about the aggregate economy. Our analysis of firm surveys from Germany and Italy shows that both types of news consistently predict forecast errors, contradicting the idea of full-information rational expectations. Yet while firm expectations overreact to micro news, they underreact to macro news. We propose a model in which firms suffer from “island illusion” to explain these patterns in the data.