Surveying business uncertainty

Abstract

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Presidential Address: Corporate Finance and Reality

“…First, following Friedman (1953), the common themes and other results that I document may provide for a wider range of assumptions within traditional models, some of which might lead to improved predictability. Second, for those who favor the subset of realistic assumptions, knowing which assumptions and processes 21 Altig et al (2020), based on several hundred monthly responses from financial executives, and Bloom et al (2020), based on a Census question answered by managers at more than 30,000 plants, find that the 10 th (90 th ) percentile forecast aligns with the "lowest" ("highest") forecast when respondents probability-weight five possible future outcomes: lowest, low, middle, high, and highest. That is, these respondents assign a 10% probability of the "lowest" and "highest" forecasts occurring.…”

The impact of the COVID-19 pandemic on business expectations

“… 6 See Altig et al (2020a) for an overview of the SBU survey and its properties. At the SBU’s inception, the survey elicited one-year-ahead unit-cost (inflation) expectations from firms using a question design that differed from that of the BIE in the choice to allow respondents to input both the support points and associated probabilities, rather than assigning probabilities to fixed bins.…”

Investment and Subjective Uncertainty

“…8 Bloom and Davis worked with a team at the Atlanta Fed to develop a similar survey on a smaller panel of around 1,750 firms to collect monthly expectations data over time, and to provide first and second moment aggregate indicators to help inform monetary policy. See Altig et al (2020), for details about the Atlanta Fed survey, and Barrero (2022) for results from this survey. See for a similar application in a Bank of England UK survey.…”