Are business forecasts of the construction sector rational? Survey-based evidence from Malaysia

Journal Title: Economic Research-Ekonomska Istraživanja - Year 2017, Vol 30, Issue 1

Abstract

This paper extends the direct measure to business expectations in assessing the doctrine of forecast rationality in the contemporary environment of Malaysia’s construction sector. The survey’s expectational series on business operational forecasts across the period 1990 to 2010 is inconsistent with Muth’s concept of rational expectations. Although strict rationality failed to be evidenced, weakly rational conduct can be observed in capital expenditure forecasts. Nevertheless, both operational variables in question are optimistically biased upward and neither of them can accurately reflect the true market perception. This evidence casts doubt on the usefulness of the investigated survey series in providing a realistic panorama of the construction sector in the near future. Notwithstanding, the irrational upshot may drop a hint to the reader on the root of alarming property overhang and price hikes in construction-related markets since expectations play a foremost role in providing equilibrium in the supply and demand in this growth-initiating market.

Authors and Affiliations

Keywords

Related Articles

Dynamic immunisation does not imply cash flow matching: a hard application to Spain

Immunisation is not a static strategy as the literature affirms: we argue that the conditions established for reaching immunisation are unbalanced in themselves as times go on. This paper presents a valid, comprehensive...

Patterns of regional inflation persistence in a C.E.E. country. The case of Poland

This paper investigates patterns of regional inflation persistence in Poland, a representative Central and Eastern European (C.E.E.) country. This study first argues that the C.E.E. perspective is relevant in the context...

Romanian pensions system at a glance: some equity comments

The main objective of this study is to analyse the equity issues of the Romanian pension system. The analysis is carried out at two levels: at the nationwide level, aimed at identifying the welfare implications of recent...

A study of the relationship between service atmosphere and customer loyalty with specific reference to structural equation modelling

The main purpose of this paper is to investigate the relationship between service atmosphere and customer loyalty. To this end, 650 questionnaire forms were administered to German tourists in Antalya; of these, 485 were...

Differences in consumer decision-making styles among selected south-east European countries

Fast changes in retailing and complex consumer decision-making processes have increased the need for additional investigation of differences and similarities in consumer decision-making styles (CDMS) in various countries...

Download PDF file
  • EP ID EP322356
  • DOI -
  • Views 42
  • Downloads 0

How To Cite

(2017). Are business forecasts of the construction sector rational? Survey-based evidence from Malaysia. Economic Research-Ekonomska Istraživanja, 30(1), -. https://europub.co.uk/articles/-A-322356