Forward exchange rate unbiasedness is rejected in tests from the current floating exchange rate era. This paper surveys advances in this area since the publication of Hodrick's (1987) survey. It documents that the change in the future exchange rate is generally negatively related to the forward...

If Purchasing Power Parity holds in the long run, then real exchange rates are mean stationary. To test this hypothesis, monthly data on bilateral real exchange rates between the United States and five countries extending back to the 1920s are calculated. The null hypothesis of mean stationarity...

Standard exchange rate models perform poorly in out-of-sample forecasting when compared to the random walk model. We posit part of the poor performance of these models may be due to omission of political factors. We test this hypothesis by including political variables that capture...