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Expectations Formation and Risk in Three Financial Markets: Surveying What the Surveys Say

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  • MacDonald, Ronald

Abstract

This paper attempts to provide a logical overview of the literature which exploits survey data to examine issues of expectations formation and risk aversion in financial markets. Our survey suggests that: short-term expectations are excessively volatile and exhibit bandwagon effects, while longer term expectations appear to be regressive and therefore stabilising; in bond and foreign exchange markets the standard result of forward rate biasedness is due in part to time-varying premia; recent research using disaggregate foreign exchange survey data demonstrates the importance of heterogeneous expectations. Copyright 2000 by Blackwell Publishers Ltd

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economic Surveys.

Volume (Year): 14 (2000)
Issue (Month): 1 (February)
Pages: 69-100

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Handle: RePEc:bla:jecsur:v:14:y:2000:i:1:p:69-100

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References

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