The forward-bias puzzle: Still unsolved

This article argues that Pippenger's (2011) “Solution to the forward-bias puzzle” must be regarded as an econometric explanation of the famous puzzle, although it does not offer an exhaustive economic answer to it. Some of Pippenger's (2011) findings are reproduced and established in a cointegrated multiple time series model. It is suggested that economists should stop trying to working out the forward-bias puzzle and start looking for fundamentally better models of foreign exchange rate determination. A tentative alternative is provided.