Understanding the forward premium puzzle
Subtitle: a microstructure approach
By: Craig Burnside, Martin S. Eichenbaum, Sergio Rebelo
Contributors: Eichenbaum, Martin S.; Rebelo, Sergio; National Bureau of Economic Research
Series: NBER working paper series -- working paper 13278; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 13278.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] :
Description: "High-interest-rate currencies tend to appreciate relative to low-interest-rate currencies.  We argue that adverse-selection problems between participants in foreign exchange markets can account for this 'forward premium puzzle.' The key feature of our model is that the adverse selection problem facing market makers is worse when, based on public information, a currency is expected to appreciate"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 8/17/2007.

Includes bibliographical references.

Also available in print.

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Mode of access: World Wide Web.