The Business Situation: On the Meaning of an Undetermined Survey Variable

Abstract

The collection of entrepreneurial judgements in the IFO Business Survey is based on the hypothesis that “... cyclical developments... are influenced not solely by the objective circumstances, but also by assessments of businessmen concerning these facts.”¹ It therefore relies on trade cycle theories which attach particular significance to incomplete information concerning past and present events². Apart from the objective conditions and changes in the economic process, attempts are made to determine and make measurable their subjective evaluation by the entrepreneurs. These subjective judgements are supposed to be connected with corresponding measures taken by the entrepreneur which affect cyclical development. “If businessmen predominantly judge a certain economic situation uniformly, and if they act in accordance with their judgement, ... the economic impulses emanating from the private economy will be adjusted to this assessment.”³