Predicting Currency Fluctuations and Crises: Do Resident Firms Have an Informational Advantage?

33 Pages Posted: 15 Jan 2004

See all articles by Daniel Kaufmann

Daniel Kaufmann

Natural Resource Governance Institute (NRGI); The Brookings Institution

Gil Mehrez

International Monetary Fund (IMF)

Sergio L. Schmukler

World Bank - Development Research Group (DECRG)

Multiple version iconThere are 2 versions of this paper

Abstract

This paper investigates whether resident enterprise managers have an informational advantage about the countries where they work. We test this informational advantage hypothesis by using a unique dataset, the Global Competitiveness Survey. The findings suggest that local managers do have valuable information about the country where they reside. Local managers' responses improve conventional estimates of future volatility and changes in the exchange rate, which are based on economic fundamentals. These findings provide support to the theories that claim that asymmetric information is present in international financial markets and is important to understand financial crises.

Keywords: Expectations, asymmetric information, local investors, financial crises, exchange rates fluctuations, prediction, survey

JEL Classification: F3, F4, G1

Suggested Citation

Kaufmann, Daniel and Mehrez, Gil and Schmukler, Sergio, Predicting Currency Fluctuations and Crises: Do Resident Firms Have an Informational Advantage?. Journal of International Money and Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=486131

Daniel Kaufmann

Natural Resource Governance Institute (NRGI) ( email )

80 Broad Street
New York, NY 10004
United States

HOME PAGE: http://www.resourcegovernance.org

The Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States

HOME PAGE: http://www.brookings.edu/experts/kaufmannd

Gil Mehrez

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Sergio Schmukler (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN MC 3-301
Washington, DC 20433
United States
202-458-4167 (Phone)
202-522-3518 (Fax)

HOME PAGE: http://www.worldbank.org/en/about/people/s/sergio-schmukler

Register to save articles to
your library

Register

Paper statistics

Downloads
121
Abstract Views
2,280
rank
57,854
PlumX Metrics