Rational expectations and business forecasts of Malaysian Firms

The irrational behavior observed in recent studies raises the issue about the achievability on rationality. Accordingly, this study intended to examine whether or not, the employment, capital expenditure, and gross revenue expectations, of which that are formed by the Malaysian business firms from t...

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Main Author:	Chong, Lucy Lee Yun
Format:	Thesis
Language:	English
Published:	2013
Subjects:	HB Economic Theory
Online Access:	http://ir.unimas.my/id/eprint/9209/1/Lucy%20Chong%20Lee%20Yun%20ft.pdf
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spelling	my-unimas-ir.92092023-05-03T02:41:11Z Rational expectations and business forecasts of Malaysian Firms 2013 Chong, Lucy Lee Yun HB Economic Theory The irrational behavior observed in recent studies raises the issue about the achievability on rationality. Accordingly, this study intended to examine whether or not, the employment, capital expenditure, and gross revenue expectations, of which that are formed by the Malaysian business firms from the nine individual sectors and a total sector, are significantly in accordance with the Rational Expectations Hypothesis (REH). The survey expectational data of the Business Expectations Survey of Limited Companies that is published by the Department of Statistics Malaysia, and the information sets series taken from the International Financial Statistics, International Monetary Fund as well as Quarterly Economic Bulletin, Bank Negara Malaysia, on the utmost period of 1978:1 to 2010:1, are utilized for the estimations of this study. The analyses are estimated by using integrational tests, Johansen-Juselius cointegration test, rationality tests and diagnostic tests. The findings demonstrated that just five out of 30 series acted in line with the REH, while the rest are found to either hold for irrationality or undetermined. Besides, the I(0) data are more likely to fail in comforting the REH, but the I(1) data are contrariwise. Moreover, the services sectors are shown to perform better than the agricultural and industrial sectors, in serving as the rational agents to their expectations. In addition, this study indicated that the gross revenue expectations are in the position of obeying to the REH the most when the macro series have been applied and vice versa. Also, the firms are shown to be pessimistic all the way in predicting the gross revenue without the usage of macro series. Lastly, this study illustrated that the aggregated data are not prone to be rational as mentioned by pioneer studies, instead, it added to the latter studies which remarked that the diverse nature of the individual firms could make for a deeper contrast to the REH at the aggregated level. Thus, the government is recommended to conduct the policies that are capable in aiding the irrational business players, while with less intervention to the rational business players, with extra caution. Universiti Malaysia Sarawak, (UNIMAS) 2013 Thesis http://ir.unimas.my/id/eprint/9209/ http://ir.unimas.my/id/eprint/9209/1/Lucy%20Chong%20Lee%20Yun%20ft.pdf text en validuser masters Universiti Malaysia Sarawak, (UNIMAS) Faculty of Economics and Business
institution	Universiti Malaysia Sarawak
collection	UNIMAS Institutional Repository
language	English
topic	HB Economic Theory
spellingShingle	HB Economic Theory Chong, Lucy Lee Yun Rational expectations and business forecasts of Malaysian Firms
description	The irrational behavior observed in recent studies raises the issue about the achievability on rationality. Accordingly, this study intended to examine whether or not, the employment, capital expenditure, and gross revenue expectations, of which that are formed by the Malaysian business firms from the nine individual sectors and a total sector, are significantly in accordance with the Rational Expectations Hypothesis (REH). The survey expectational data of the Business Expectations Survey of Limited Companies that is published by the Department of Statistics Malaysia, and the information sets series taken from the International Financial Statistics, International Monetary Fund as well as Quarterly Economic Bulletin, Bank Negara Malaysia, on the utmost period of 1978:1 to 2010:1, are utilized for the estimations of this study. The analyses are estimated by using integrational tests, Johansen-Juselius cointegration test, rationality tests and diagnostic tests. The findings demonstrated that just five out of 30 series acted in line with the REH, while the rest are found to either hold for irrationality or undetermined. Besides, the I(0) data are more likely to fail in comforting the REH, but the I(1) data are contrariwise. Moreover, the services sectors are shown to perform better than the agricultural and industrial sectors, in serving as the rational agents to their expectations. In addition, this study indicated that the gross revenue expectations are in the position of obeying to the REH the most when the macro series have been applied and vice versa. Also, the firms are shown to be pessimistic all the way in predicting the gross revenue without the usage of macro series. Lastly, this study illustrated that the aggregated data are not prone to be rational as mentioned by pioneer studies, instead, it added to the latter studies which remarked that the diverse nature of the individual firms could make for a deeper contrast to the REH at the aggregated level. Thus, the government is recommended to conduct the policies that are capable in aiding the irrational business players, while with less intervention to the rational business players, with extra caution.
format	Thesis
qualification_level	Master's degree
author	Chong, Lucy Lee Yun
author_facet	Chong, Lucy Lee Yun
author_sort	Chong, Lucy Lee Yun
title	Rational expectations and business forecasts of Malaysian Firms
title_short	Rational expectations and business forecasts of Malaysian Firms
title_full	Rational expectations and business forecasts of Malaysian Firms
title_fullStr	Rational expectations and business forecasts of Malaysian Firms
title_full_unstemmed	Rational expectations and business forecasts of Malaysian Firms
title_sort	rational expectations and business forecasts of malaysian firms
granting_institution	Universiti Malaysia Sarawak, (UNIMAS)
granting_department	Faculty of Economics and Business
publishDate	2013
url	http://ir.unimas.my/id/eprint/9209/1/Lucy%20Chong%20Lee%20Yun%20ft.pdf
_version_	1783728039705706496

Rational expectations and business forecasts of Malaysian Firms

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