Bacchetta, Philippe; Wincoop, Eric van; Beutler, Toni - Swiss National Bank, Study Center Gerzensee - 2009
The empirical literature on nominal exchange rates shows that the current exchange rate is often a better predictor of future exchange rates than a linear combination of macroeconomic fundamentals. This result is behind the famous Meese-Rogoff puzzle. In this paper we evaluate whether parameter...