Exchange Rate Expectations
Author | : International Monetary Fund |
Publisher | : International Monetary Fund |
Total Pages | : 36 |
Release | : 1990-06-01 |
ISBN-10 | : 9781451970203 |
ISBN-13 | : 145197020X |
Rating | : 4/5 (03 Downloads) |
Download or read book Exchange Rate Expectations written by International Monetary Fund and published by International Monetary Fund. This book was released on 1990-06-01 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a brief survey of the empirical literature on survey-based exchange rate expectations. The literature in general supports the presence of a non-zero risk premium and rejects the hypothesis of rational expectations. The crucial result is that, while short-run expectations tend to move away from some long-run “normal” values, long-run expectations tend to regress toward them. If this nature of short-run expectations increases the volatility of exchange rate movements, there may be a basis for some official measure to minimize short-run exchange rate movements.