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Bandwagon Effects or Rational Expectations in the Exchange Rate?

In: Open-Economy Macroeconomics

Author

Listed:
  • Vasumathi Vijayraghavan

    (University of Paris-Dauphine)

Abstract

The focus of financial market research in the 1970s was the testing of efficiency. Since then the focus has shifted to examining risk premia or various manifestations of inefficiency in the strict sense. Recent developments have also focused on irrationalities such as chaos, bubbles and fads, emphasising the heterogeneousness of market participants which manifests itself primarily in informational inequalities. For instance, whether the heterogeneity manifests itself, as in the exchange market, in the dichotomy between chartists and fundamentalists or through feedback traders and ‘rational traders’, the difference comes down to differences between information sets.1

Suggested Citation

  • Vasumathi Vijayraghavan, 1993. "Bandwagon Effects or Rational Expectations in the Exchange Rate?," International Economic Association Series, in: Helmut Frisch & Andreas Wörgötter (ed.), Open-Economy Macroeconomics, chapter 21, pages 400-407, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-349-12884-6_21
    DOI: 10.1007/978-1-349-12884-6_21
    as

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