Pınar Yeşin, 26 October 2016

The IMF invests significant resources in developing models to estimate equilibrium exchange rates. This column assesses the predictive power of one vintage of IMF exchange rate models during 2006–2011. The models performed exceptionally well at predicting exchange rate movements over the medium run, which is particularly remarkable given that the period covered the unanticipated Global Crisis and the assessments were not shared publicly at the time.

Pasquale Della Corte, Tarun Ramadorai, Lucio Sarno, 09 January 2014

Economists widely view exchange rate changes as unpredictable. This column explains a new currency trading strategy with economically valuable and statistically significant currency excess returns. The returns are generated primarily by spot exchange rate returns, rather than interest differentials. The strategy’s performance can be explained by speculator-hedger interactions in the currency market in the presence of time-varying capital constraints on speculators.


CEPR Policy Research