Exchange Rate Expectations: Survey of Survey Studies

International Monetary Fund

No 1990/052, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; U.S. dollar; exchange rate expectation; exchange rate; deutsche mark; equilibrium exchange rate; dollar depreciation; exchange rate movement; U.S. dollar exchange rate; Exchange rates; Currencies; Return on investment; Depreciation; Currency markets (search for similar items in EconPapers)
Pages: 36
Date: 1990-01-01
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