Explore how economists can improve exchange rate models by adopting the perspectives of currency traders, specifically focusing on market microstructure and the significance of order flows over traditional macro fundamentals to explain market behavior.
I explore why currency forwards are not unbiased estimators of future spot rates but function instead as certainty equivalents. This distinction clarifies risk-adjusted forward pricing and connects financial valuation concepts to the Kelly criterion principles.
I explore a discussion on how inflation changed currency's role. While money once stored value and measured wealth, its constant fluctuations mean it now serves primarily as a medium for exchanging goods and services.
I highlight a policy change allowing dollar earners in India to retain their foreign currency, noting the strategic timing of this move as the US dollar depreciates against the rupee according to current exchange trends.
I'm checking out Blogshares, a fantasy stock market for blogs where users trade with $500 of notional currency. It creates an artificial economy by allowing participants to buy and sell stakes in their favorite weblogs.
I highlight how psychological framing in bank loan offers often outweighs interest rates. A study showed that small changes, like using a woman's photo, increased demand as much as a five percentage point rate drop.