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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...
Persistent link: https://www.econbiz.de/10005791916
paper we present a non-linear, deterministic model, incorporating concepts from chaos theory, which is capable of producing …
Persistent link: https://www.econbiz.de/10005281331