Economics, Econometrics and Finance
4 years ago

Foreign exchange forecasts found to be irrational, challenging traditional expectations.

International Finance Discussion Paper
Are Foreign Exchange Forecasts Rational? New Evidence From Survey Data
Kathryn M.E. Dominguez

Paper Summary

The article examines foreign exchange forecasts to see if they are rational. The researchers looked at data from four currency markets to study how people form their expectations. The results show that in general, foreign exchange forecasts do not follow the simple rational expectations idea.

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