Exchange Rate Expectations: A Survey of Survey Studies
The empirical literature on survey-based exchange rate expectations is briefly surveyed. The literature in general supports the presence of a nonzero risk premium and rejects the hypothesis of rational expectations. The crucial result is that, whereas short-run expectations tend to move away from some long-run "normal" values, long-run expectations tend to move back toward them. If this behavior of short-run expectations increases the volatility of exchange rate movements, there may be a basis for an official measure to minimize short-run exchange rate movements.
Volume (Year): 38 (1991)
Issue (Month): 1 (March)
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