Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
Survey data on a broad cross section of 17 currencies are used to determine whether the forward discount moves primarily in response to changes in expectations of depreciation, or in the risk premium. We find that, in contrast to earlier studies involving developed country exchange rates, variation in the risk premium is a quantitatively significant factor in movements of the forward discount. However, changes in expectations also have a substantial effect. Copyright 1993 by Blackwell Publishing Ltd.