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Short‐Term Horizons in Foreign Exchange? Survey Evidence from dealers and Fund Managers
Author(s) -
Menkhoff Lukas
Publication year - 2001
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/1467-6435.00139
Subject(s) - anticipation (artificial intelligence) , term (time) , incentive , economics , horizon , position (finance) , new horizons , foreign exchange , time horizon , actuarial science , financial economics , monetary economics , microeconomics , finance , mathematics , computer science , engineering , physics , geometry , quantum mechanics , artificial intelligence , spacecraft , aerospace engineering
The paper examines the extent and determinants of short‐term horizons in taking open positions using a questionnaire mailed to professional foreign exchange market participants in Germany. The findings reveal that the absolute anticipation horizon is short, but not necessarily short‐termist. Another related but empirically different measure is proposed, based on the relative length of different horizons; its use clearly shows widespread restrictions in relation to optimal behavior. No determinants in personal characteristics were established for either empirical measure; rather the instituional environment was found to be an influence. Thus, professionals may adept rationally to their incentive structure, which works towards short‐term horizons in position taking.