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Assessing Market Expectations on Exchange Rates and Inflation: A Pilot Forecasting System for Bulgaria

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Author Info
Michael Berlemann ()
Kalina Dimitrova ()
Nikolay Nenovsky

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Abstract

Econometric forecasting models typically perform bad in volatile environments as they are often present in economies in transition. Since forecasts of key macroeconomic variable are inevitable as guidelines for economic policy, one might alternatively make attempts at measuring market participants’ expectations or conduct surveys. However, often financial markets are underdeveloped and regular surveys are unavailable in transition countries. In this paper we propose to conduct experimental stock markets to reveal market participants’ expectations. W? present the results fr?m a series of pilot markets conducted in Bulgaria throughout 2002 indicating that the method could be useful especially for transition countries.

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Publisher Info
Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number wp759.

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Date of creation: 01 Mar 2000
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Handle: RePEc:wdi:papers:2005-759

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Related research
Keywords: forecasting; macroeconomics; inflation; exchange rates; experimental stock markets;

Find related papers by JEL classification:
C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation

References listed on IDEAS
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  1. Jacobsen, Ben & Potters, Jan & Schram, Arthur & van Winden, Frans & Wit, Jorgen, 2000. "(In)accuracy of a European political stock market: The influence of common value structures," European Economic Review, Elsevier, vol. 44(2), pages 205-230, February. [Downloadable!] (restricted)
  2. Woodford, Michael, 2001. "Fiscal Requirements for Price Stability," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(3), pages 669-728, August.
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  3. Komulainen, Tuomas & Pirttila, Jukka, 2002. " Fiscal Explanations for Inflation: Any Evidence from Transition Economies?," Economic Change and Restructuring, Springer, vol. 35(3), pages 293-316. [Downloadable!] (restricted)
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  4. Lamont, Owen A., 2002. "Macroeconomic forecasts and microeconomic forecasters," Journal of Economic Behavior & Organization, Elsevier, vol. 48(3), pages 265-280, July. [Downloadable!] (restricted)
  5. Cukierman, Alex, 1982. "Relative price variability, inflation and the allocative efficiency of the price system," Journal of Monetary Economics, Elsevier, vol. 9(2), pages 131-162. [Downloadable!] (restricted)
  6. Woodford, Michael, 1995. "Price-level determinacy without control of a monetary aggregate," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 43(1), pages 1-46, December. [Downloadable!] (restricted)
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This page was last updated on 2009-11-19.


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