Studies of chaos in foreign exchange markets often lack a theoretical underpinning. This paper tries to give some reasons why exchange rate movements may become chaotic. Starting from an assumption about different groups of traders that goes beyond recent models of fundamentalists’ and chartists’ behaviour it argues that, to capture the idea of chaos, foreign exchange markets have to be modelled as a dissipative system and not, as usual, as a closed conservative one. A qualitative system dynamics approach is chosen to demonstrate the complex interaction processes arising.

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Date created

• 1992

Type

• Document

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• Creative Commons BY-NC-ND Attribution-NonCommercial-NoDerivs 4.0 International

  
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Collection

System Dynamic Society Records

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Collecting area

• This collection is part of the University Archives