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  • Pierre-Olivier Gourinchas, Aaron Tornell, +10 authors Karen Lewis
  • 2003
We propose a new explanation for the foreign exchange forward-premium and delayed-overshooting puzzles. We show that both puzzles arise from a systematic distortion in investors's beliefs about the interest rate process. Accordingly, the forward premium is always a biased predictor of future depreciation; the bias can be so severe as to lead to negative(More)
We construct investor sentiment indices for six major stock markets and decompose them into one global and six local indices. In a validation test, we find that relative sentiment is correlated with the relative prices of dual-listed companies. Global sentiment is a contrarian predictor of country-level returns. Both global and local sentiment are(More)
The purpose of this book is to provide the reader with vital communication concepts and tools to assist in preparing for and responding to a severe influenza pandemic in the United States. The focus of the book is on the possibility of a severe pandemic. Although the concepts do apply to less intense public health challenges, they may not need to be(More)
for useful discussions. We are also grateful for comments from Abstract Our objective is to identify the trading strategy that would allow an investor to take advantage of " excessive " stock price volatility and " sentiment " fluctuations. We construct a general-equilibrium model of sentiment. In it, there are two classes of agents and stock prices are(More)
There is tremendous excitement about the promise of new genomic technologies to transform medical practice and improve patient care. Although the full power of genetic diagnosis has not yet been realized, paradigms of clinical decision-making are changing. In fact, recent policy level changes to promote genetic counseling by certified genetics professionals(More)
I n an open macroeconomy, in which asset trade is possible, the portfolio choice of households may play an important role in understanding macro fluctuations. In contrast to a closed economy model, in which a representative agent simply holds the market portfolio, agents in each country may hold different portfolios depending on the country-specific risks(More)
We describe a novel currency investment strategy, the 'dollar carry trade,' which delivers large excess returns, uncorrelated with the returns on well-known carry trade strategies. Using a no-arbitrage model of exchange rates we show that these excess returns compensate U.S. investors for taking on aggregate risk by shorting the dollar in bad times, when(More)