Manufacturing Stocks and Forward-Looking Expectations in the UK.
This paper derives a model of the stocks plan based on optimal behavior by the firm when facing adjustment costs with forward-looking expectations formation. Estimates of the model are reported for manufacturing, using three alternative expectations mechanisms for determining expected sales: time series; published forecasts (derived from National Institute published forecasts); and rational expectations. The latter uses a submodel dependent on weakly exogenous variables. Single equation and whole model comparisons are made of the stocks equation estimated with forward expectations versus a traditional backward-looking model. These favor the forward-looking model. Copyright 1986 by The Review of Economic Studies Limited.
Year of publication: |
1986
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Authors: | Hall, Stephen G ; Henry, S G B ; Wren-Lewis, Simon |
Published in: |
Economica. - London School of Economics (LSE). - Vol. 53.1986, 212, p. 447-65
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Publisher: |
London School of Economics (LSE) |
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