A Chaotic Monetary Model of the Exchange Rate

Paul De Grauwe and Hans Dewachter

No 466, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We use a monetary (Dornbusch) model of the exchange rate and introduce speculative dynamics, in which fundamentalists and chartists interact. The resulting non-linearities in the model produce `chaotic' behaviour of the exchange rate. We also analyse the effects of money-stock surprises in such a model. Finally, we study the behaviour of the exchange rate when `news' occurs infrequently.

Keywords: Chaos; Chartism; Fundamental Analysis; Monetary Exchange Model (search for similar items in EconPapers)
Date: 1990-10
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Citations: View citations in EconPapers (19)

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Chapter: A Chaotic Monetary Model of the Exchange Rate (1993)
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