The expected industrial production volume estimated with the help of data from the business-cycle test

Summary Expectations play a crucial role in economics. The testing of hypotheses about the formation of expectations is hampered by the lack of data. In this article we try to measure expectations in an independent way, using data from the Business Cycle Test. The data refer to the output of the Dutch manufacturing industry. The results indicate that both error-correcting and extrapolative mechanisms are relevant in the process of expectation formation.The author is indebted to Professors Paelinck and Siddré for their helpful comments; they are, of course, in no way responsible for any remaining errors. Thanks are also due to two anonymous referees for their critical remarks. Mrs. Elderson-De Boer translated the original Dutch draft into English.