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Yen/Dollar Exchange Rate Expectations in the 1980-90's

June 1999
Naoko Hara
Koichiro Kamada

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This paper examines survey expectations of the yen/dollar exchange rate. We fit simple mechanisms on the survey expectations and test their rationality. We present the puzzling fact that in the 1990's the short-horizon expectations have lost their destabilizing property observed in the late 1980's and instead become static unlike the actual movement of the spot exchange rate.