Excess Volatility and Speculative Bubbles in the Canadian Dollar: Real or Imagined?
Bibliographic record
Abstract
Greater intervention by the public sector is often proposed as a solution to the increased speculation and excessive price volatility thought to characterize today's competitive world financial system. However, before any ambitious policy responses can be contemplated, the question of whether asset prices are in fact subject to excess volatility needs to be answered. This paper tries to answer the question by using the Canadian dollar as a representative asset and testing for excess volatility and speculative bubbles. In the main, the empirical sections of the paper provide little support for the excess volatility argument and the subsequent need for government intervention. The short-term variability of the dollar, like that of most other financial assets, has not shown any tendency to increase over time. The evidence also suggests that most of the broad movements in the dollar can be explained by changes in market fundamentals as opposed to aberrant speculative activity. While some evidence of noise trading and speculative behaviour was uncovered by the authors using a regime-switching model, periods of increased exchange rate volatility appeared to be associated with equilibrating trading activity, pushing exchange rates closer to fundamentals, rather than to destabilizing market forces. In short, the exchange market is performing more or less as it should and is not in any obvious need of remedial government action.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.005 | 0.001 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.001 | 0.000 |
| Bibliometrics | 0.001 | 0.000 |
| Science and technology studies | 0.000 | 0.000 |
| Scholarly communication | 0.001 | 0.000 |
| Open science | 0.001 | 0.001 |
| Research integrity | 0.001 | 0.002 |
| Insufficient payload (model declined to judge) | 0.001 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".