The solution to the forward-bias puzzle: Reply

Pippenger John

Journal of International Financial Markets, Institutions and Money, 2011, vol. 21, issue 4, 629-636

Abstract: My proposed econometric solution to the forward-bias puzzle provoked several comments. Those comments raise three primary objections to my solution. (1) It suffers from multicollinearity, miss-specification and other serious econometric problems. (2) My key test equation is a tautology or identity. (3) My econometric solution has nothing to do with either the forward-bias puzzle or uncovered interest parity. This is my reply to those objections.

Keywords: Exchange; rates; Forward-bias; puzzle; Covered; interest; parity; Uncovered; interest; parity; Arbitrage (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:21:y:2011:i:4:p:629-636

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