CURRENCY FORECASTERS ARE HETEROGENEOUS - CONFIRMATION AND CONSEQUENCES

Using a disaggregated international survey database we demonstrate tha t foreign exchange forecasters hold heterogeneous expectations. We fin d that a major cause of these differences of opinion is the idiosyncra tic interpretation of widely available information, and that this hete rogeneity translates into economically meaningful differences in forec ast accuracy. Finally, we show that such disagreements are key variabl es in determining market trading volume. Copyright (C) 1996 Elsevier S cience Ltd