Expectations Formation and Risk in Three Financial Markets: Surveying What the Surveys Say

Ronald MacDonald

Journal of Economic Surveys, 2000, vol. 14, issue 1, 69-100

Abstract: This paper attempts to provide a logical overview of the literature which exploits survey data to examine issues of expectations formation and risk aversion in financial markets. Our survey suggests that: short term expectations are excessively volatile and exhibit bandwagon effects, while longer term expectations appear to be regressive and therefore stabilising; in bond and foreign exchange markets the standard result of forward rate biasedness is due in part to time‐varying premia; recent research using disaggregate foreign exchange survey data demonstrates the importance of heterogeneous expectations.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jecsur:v:14:y:2000:i:1:p:69-100

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