This paper reconsiders the issue of exchange rate dynamics in light of recent empirical evidence on the possible failure of rational exchange rate expectations. The Dornbusch model is respecified using three popular models of exchange rate expectations tested by Frankel and Froot. A key result of th
✦ LIBER ✦
Models of exchange rate expectations: how much heterogeneity?
✍ Scribed by Agnès Bénassy-Quéré; Sophie Larribeau; Ronald MacDonald
- Book ID
- 117699507
- Publisher
- Elsevier Science
- Year
- 2003
- Tongue
- English
- Weight
- 245 KB
- Volume
- 13
- Category
- Article
- ISSN
- 1042-4431
No coin nor oath required. For personal study only.
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## Abstract Foreign exchange rate expectations play a central role in virtually all monetary models for the open economy. Therefore, it is extremely important to gain empirical insights into the expectations formation process. In this paper, we use a unique disaggregated data set to model the expec