A chaotic model of the exchange rate: The role of fundamentalists and chartists

Paul Grauwe and Hans Dewachter

Open Economies Review, 1993, vol. 4, issue 4, 379 pages

Abstract: A monetary model of the exchange rate is constructed in which “fundamentalists” and “chartists” interact. It is shown that the non-linearity of this speculative dynamics leads to chaotic motion of the exchange rate. The model is also capable of generating some of the stylized facts of exchange rate dynamics. Copyright Kluwer Academic Publishers 1993

Keywords: exchange rate; chaos; fundamentalism; chartism (search for similar items in EconPapers)
Date: 1993
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DOI: 10.1007/BF01011136

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