Long Swings in the Exchange Rate and the Excess Returns Puzzle: The Role of Imperfect Knowledge The paper is a clear breath of "dirty" air in the sterile world of perfect foresight. The authors offer a well worked out model of how agents persistently bid the exchange rate away from the expected long-run equilibrium rate. It seems intuitively comfortable to see the mathematical justification for the unexplained excess returns to be a function of the distance from the bench-mark (PPP). The uncertainty of a switch occurring in a regime (the Peso Problem) is an interest-ing form within which to embed the imperfect information. It is a format that seems ready to ex-pand into many other areas of economic modeling in which expec....

Number Of Pages: 2

Number Of Words: 518

Got a term paper due soon and need some help quick? You have come to the right place. Essay Galaxy has over 50,000 essays, papers, and reports available for download right now! Get ideas from thousands students just like you to help make that essay perfect. Don't hesitate. Join today and get instant access to our enormous database.

Membership Options Price Savings   1 month subscription    $19.95 recurring * 3 months subscription    $39.95 recurring $19.90 6 months subscription    $69.95 non-recurring $49.75