International Finance Discussion Papers (IFDP)
May 1986
Are Foreign Exchange Forecasts Rational? New Evidence From Survey Data
Kathryn M. Dominguez
Abstract:
Tests of rational expectations in foreign exchange markets have been inconclusive because of disagreement over the underlying asset pricing model. This paper uses a newly available set of data on foreign exchange forecasts to examine directly expectations formation in four foreign currency markets. Generally, results do not support the simple rational expectations hypothesis.
PDF: Full Paper
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