Christodoulakis, Nikos; Kalyvitis, Sarantis C - C.E.P.R. Discussion Papers - 1997
This paper re-examines the standard ‘unbiasedness’ hypothesis in foreign exchange markets, according to which the forward premium should be an unbiased predictor of the future change of the spot exchange rate. If traders are heterogeneous, they may consist of ‘fundamentalists’ who...