Abstract
This article generalizes the results shown in De Grauwe, Dewachter, and Embrechts (1993) in a more sophisticated framework. In their model, the speculative dynamics resulting from the interaction between chartists and fundamentalists are incorporated into a Dornbusch-style model to generate a chaotic nominal exchange rate. Here the model of Obstfeld and Rogoff (1995, 1996) replaces the Dornbusch model, and chaotic solutions are still shown to be possible for sensible parameter values.
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Da Silva, S. Chaotic Exchange Rate Dynamics Redux. Open Economies Review 12, 281–304 (2001). https://doi.org/10.1023/A:1011181423098
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DOI: https://doi.org/10.1023/A:1011181423098