TY - JOUR
T1 - Measuring business-level expectations and uncertainty
T2 - survey evidence and the COVID-19 pandemic
AU - Chen, Cheng
AU - Senga, Tatsuro
AU - Zhang, Hongyong
N1 - Funding Information:
This research was conducted as part of the project “Studies on the Impact of Uncertainty and Structural Change in Overseas Markets on Japanese Firms’ at the Research Institute of Economy, Trade and Industry (RIETI). This study utilizes questionnaire information data based on the Business Plans and Expectations Survey conducted by RIETI and the Basic Survey of Japanese Business Structure and Activities conducted by the Ministry of Economy, Trade and Industry (METI). We would like to thank Nick Bloom, Steven Davis, Masahiro Endoh, Kyle Handley, Fukunari Kimura, Kozo Kiyota, Masayuki Morikawa, Hiroshi Mukunoki, Chang Sun, Eiichi Tomiura, Makoto Yano, and Morihiro Yomogida for their helpful comments. Financial support from JSPS KAKENHI (grant number: 17H02531), RIETI, and HKGRF (project code: 17507916) is greatly appreciated.
Funding Information:
This research was conducted as part of the project ?Studies on the Impact of Uncertainty and Structural Change in Overseas Markets on Japanese Firms? at the Research Institute of Economy, Trade and Industry (RIETI). This study utilizes questionnaire information data based on the Business Plans and Expectations Survey conducted by RIETI and the Basic Survey of Japanese Business Structure and Activities conducted by the Ministry of Economy, Trade and Industry (METI). We would like to thank Nick Bloom, Steven Davis, Masahiro Endoh, Kyle Handley, Fukunari Kimura, Kozo Kiyota, Masayuki Morikawa, Hiroshi Mukunoki, Chang Sun, Eiichi Tomiura, Makoto Yano, and Morihiro Yomogida for their helpful comments. Financial support from JSPS KAKENHI (grant number: 17H02531), RIETI, and HKGRF (project code: 17507916) is greatly appreciated.
Publisher Copyright:
© 2021, The Author(s).
PY - 2021/7
Y1 - 2021/7
N2 - Utilizing a unique firm-level survey in Japan that contains five-bin forecasts for sales, we document three findings. First, firm-level subjective uncertainty is highly and positively related to volatility of past firm growth. Second, there are substantial variations in subjective uncertainty across firms, with a long right tail with extremely high subjective uncertainty. In addition, firms that have exposure to international businesses either through international trade or foreign direct investment have both higher average expected sales and subjective uncertainty. Finally, the sudden escalation of the COVID-19 pandemic in January–February 2020 led to a substantial increase in firms’ subjective uncertainty. Our triple-difference estimation results show that this effect is especially large for firms that have direct exposure to China through international trade and foreign direct investment.
AB - Utilizing a unique firm-level survey in Japan that contains five-bin forecasts for sales, we document three findings. First, firm-level subjective uncertainty is highly and positively related to volatility of past firm growth. Second, there are substantial variations in subjective uncertainty across firms, with a long right tail with extremely high subjective uncertainty. In addition, firms that have exposure to international businesses either through international trade or foreign direct investment have both higher average expected sales and subjective uncertainty. Finally, the sudden escalation of the COVID-19 pandemic in January–February 2020 led to a substantial increase in firms’ subjective uncertainty. Our triple-difference estimation results show that this effect is especially large for firms that have direct exposure to China through international trade and foreign direct investment.
KW - COVID-19
KW - Firm expectations
KW - Subjective uncertainty
UR - http://www.scopus.com/inward/record.url?scp=85109257351&partnerID=8YFLogxK
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U2 - 10.1007/s42973-021-00078-8
DO - 10.1007/s42973-021-00078-8
M3 - Article
AN - SCOPUS:85109257351
SN - 1352-4739
VL - 72
SP - 509
EP - 532
JO - Japanese Economic Review
JF - Japanese Economic Review
IS - 3
ER -
