We analyse the workings of a simple non-lnear exchange rate model in which agents hold different beliefs about the underlying model. We destinguish between "chartists" and fundamentalists". The non-linearities in the model originate from transactions costs and from the existence of non-linear...

In this paper we develop a model of the exchange rate. The existence of transactions costs introduces an important non-linearity. Agents have different beliefs about the future exchange rate. We show that this simple model creates great complexity in the market which is characterised by the fact...

In this paper we develop a model of the exchange rate. The existence of transactions costs introduces an important non-linearity. Agents have different beliefs about the future exchange rate. We show that this simple model creates great complexity in the market which is characterised by the fact...

We analyse the workings of a simple non-linear exchange rate model in which agents hold different beliefs about the underlying model. We distinguish between chartists and fundamentalists . The non-linearities in the model originate from transactions costs and from the existence of non-linear...

We analyse the workings of a simple non-linear exchange rate model in which agents hold different beliefs about the underlying model. We distinguish between "chartists" and "fundamentalists". The non-linearities in the model originate from transactions costs and from the existence of non-linear...

We develop a nonlinear exchange rate model with heterogeneous agents. Some agents adopt a "fundamentalist" forecasting rule, while others use a "chartist" forecasting rule. We show that the model is capable of explaining the empirical puzzles relating to exchange rate movements. In particular,...