Abstract
The transition of the European Currency System to a common currency offers an opportunity for the study of speculation in foreign exchanges. There are many reasons for speculative activities in the transition to the Euro. Speculation, as a matter of motives, can only indirectly be observed, that is to say by the statistical evaluation of the behaviour of exchange markets. Five examples are tested which are based on the proposition that the presence of speculation is eventually revealed in certain residuals. Another approach is the comparison of the variances of exchange rate estimates which does not lead to clear results. Finally, the evaluation of random walk estimations reveals a trend of increasing efficiency of certain foreign exchange markets.
The Author is indebted for discussions and hints to Johann Kellerer, Heinz D. Kurz and Ulrike Leopold-Wildburger.
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Beinsen, L. (1999). On the Question of Speculation in Favour of or against the Euro before its Start. In: Leopold-Wildburger, U., Feichtinger, G., Kistner, KP. (eds) Modelling and Decisions in Economics. Physica, Heidelberg. https://doi.org/10.1007/978-3-662-12519-9_4
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DOI: https://doi.org/10.1007/978-3-662-12519-9_4
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