This paper explores the consequences of imperfect knowledge for exchange rate dynamics within the monetary class of models. The authors' framework, which they call the theories consistent expectations framework, provides a particular formalization of a world in which agents use theories in order...

Using a large sample of data on mid-sized firms in the Czech Republic, Hungary, and Poland, the authors compare the performance of privatized and state firms in the environment of the postcommunist transition. They find strong evidence that private ownership--except for worker ownership--...

This paper discusses a number of likelihood ratio tests on long-run relations and common trends in the I(2) model and provide new results on the test of overidentifying restrictions on β’xt and the asymptotic variance for the stochastic trends parameters, α⊥1: How to specify deterministic...

This paper offers a refinement and explores a resolution of the excess-returns puzzle in the foreign exchange market. We find that the predictions of the forward premium are not negatively biased throughout the three decades of floating, as commonly believed, but rather are sometimes positively...

This paper compares the performance of privatized and state firms in the transition economies of Central Europe, while controlling for various forms of selection bias. It argues that privatization has different effects depending on the types of owners to whom it gives control. In particular,...

Posing a major challenge to economic orthodoxy, <i>Imperfect Knowledge Economics</i> asserts that exact models of purposeful human behavior are beyond the reach of economic analysis. Roman Frydman and Michael Goldberg argue that the longstanding empirical failures of conventional economic models stem...