Expectations’ Formation in Business Survey Data

In this paper we conduct a three step analysis of business tendency survey data in order to establish (1) common factors driving responses to groups of questions in the business tendency survey conducted among firms in the manufacturing industry in Poland, (2) factors responsible for respondents’ answers regarding assessments (present) and expectations (future), and (3) interrelations between current assessments and expectations. We start by performing a check of the factor structure with multi-group confirmatory factor analysis (MGCFA) models in order to establish common factors responsible for sets of answers in the area of assessments and expectations, respectively. Then, we proceed with structural equation modeling (SEM) framework in order to define period specific relations between the factors. With the final structural model we show that most answers in the area of current assessments and expectations of companies are in line with the stylised facts. We also demonstrate that the companies’ response pattern did not change during the financial crisis.