Testing rational expectations hypothesis in the manufacturing sector in Malaysia
The application of rational expectations hypothesis (REH) in macroeconomic research has marked a revolution in economic thinking, and the magnitude of its impact on the world of economics is undeniably significant. However, the extent to which REH applies in real-world settings is ambiguous even tho...
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| Format: | Article |
| Language: | English |
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Taylor & Francis
2013
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| Online Access: | http://ir.unimas.my/id/eprint/18022/ http://ir.unimas.my/id/eprint/18022/1/TESTING%20RATIONAL%20EXPECTATIONS%20HYPOTHESIS%20IN%20THE%20MANUFACTURING%20SECTOR%20IN%20MALAYSIA%20%28abstract%29.pdf |
| _version_ | 1848838418341036032 |
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| author | Puah, Chin Hong Wong, Shirly Siew-Ling Liew, Venus Khim-Sen |
| author_facet | Puah, Chin Hong Wong, Shirly Siew-Ling Liew, Venus Khim-Sen |
| author_sort | Puah, Chin Hong |
| building | UNIMAS Institutional Repository |
| collection | Online Access |
| description | The application of rational expectations hypothesis (REH) in macroeconomic research has marked a revolution in economic thinking, and the magnitude of its impact on the world of economics is undeniably significant. However, the extent to which REH applies in real-world settings is ambiguous even though the concept of REH is well established in economics literature because empirical evidence from previous studies is clearly mixed. This study used survey data on gross revenue and capital expenditures to examine the validity of REH in Malaysian manufacturing business expectations. Empirical results indicated that the manufacturers’ expectations are being irrationally constructed in terms of gross revenue predictions but comply with REH properties in Muth's sense in the case of capital expenditures forecasts. Therefore, manufacturing firms in Malaysia are encouraged to incorporate more relevant information into their gross revenue predictions to provide more accurate and realistic forecasting. |
| first_indexed | 2025-11-15T06:55:14Z |
| format | Article |
| id | unimas-18022 |
| institution | Universiti Malaysia Sarawak |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T06:55:14Z |
| publishDate | 2013 |
| publisher | Taylor & Francis |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | unimas-180222017-10-06T00:42:47Z http://ir.unimas.my/id/eprint/18022/ Testing rational expectations hypothesis in the manufacturing sector in Malaysia Puah, Chin Hong Wong, Shirly Siew-Ling Liew, Venus Khim-Sen H Social Sciences (General) The application of rational expectations hypothesis (REH) in macroeconomic research has marked a revolution in economic thinking, and the magnitude of its impact on the world of economics is undeniably significant. However, the extent to which REH applies in real-world settings is ambiguous even though the concept of REH is well established in economics literature because empirical evidence from previous studies is clearly mixed. This study used survey data on gross revenue and capital expenditures to examine the validity of REH in Malaysian manufacturing business expectations. Empirical results indicated that the manufacturers’ expectations are being irrationally constructed in terms of gross revenue predictions but comply with REH properties in Muth's sense in the case of capital expenditures forecasts. Therefore, manufacturing firms in Malaysia are encouraged to incorporate more relevant information into their gross revenue predictions to provide more accurate and realistic forecasting. Taylor & Francis 2013 Article PeerReviewed text en http://ir.unimas.my/id/eprint/18022/1/TESTING%20RATIONAL%20EXPECTATIONS%20HYPOTHESIS%20IN%20THE%20MANUFACTURING%20SECTOR%20IN%20MALAYSIA%20%28abstract%29.pdf Puah, Chin Hong and Wong, Shirly Siew-Ling and Liew, Venus Khim-Sen (2013) Testing rational expectations hypothesis in the manufacturing sector in Malaysia. Journal of Business Economics and Management, 14 (2). pp. 303-316. ISSN 2029-4433 http://www.tandfonline.com/doi/abs/10.3846/16111699.2011.631743?journalCode=tbem20 doi:10.3846/16111699.2011.631743 |
| spellingShingle | H Social Sciences (General) Puah, Chin Hong Wong, Shirly Siew-Ling Liew, Venus Khim-Sen Testing rational expectations hypothesis in the manufacturing sector in Malaysia |
| title | Testing rational expectations hypothesis in the manufacturing sector in Malaysia |
| title_full | Testing rational expectations hypothesis in the manufacturing sector in Malaysia |
| title_fullStr | Testing rational expectations hypothesis in the manufacturing sector in Malaysia |
| title_full_unstemmed | Testing rational expectations hypothesis in the manufacturing sector in Malaysia |
| title_short | Testing rational expectations hypothesis in the manufacturing sector in Malaysia |
| title_sort | testing rational expectations hypothesis in the manufacturing sector in malaysia |
| topic | H Social Sciences (General) |
| url | http://ir.unimas.my/id/eprint/18022/ http://ir.unimas.my/id/eprint/18022/ http://ir.unimas.my/id/eprint/18022/ http://ir.unimas.my/id/eprint/18022/1/TESTING%20RATIONAL%20EXPECTATIONS%20HYPOTHESIS%20IN%20THE%20MANUFACTURING%20SECTOR%20IN%20MALAYSIA%20%28abstract%29.pdf |