The inability to reconcile observed levels of foreign exchange rate volatility with predictions derived from rational expectations models represents one of the most persistent challenges in international finance. This paper shows that such excess volatility puzzles arise from informational...

We derive the first closed-form optimal refinancing rule for mortgages: Refinance when the current mortgage interest rate falls below the original mortgage interest rate by at least (1/ψ)[φ W(-exp(-φ))], where W(.) is the principal branch of the Lambert W-function, ψ=((√(2(ρ λ)))/σ),...