Small Open Economies under Behavioral FX Trading

Christian Proaño
Written By SCEPA

WORKING PAPER

DOWNLOAD PDF

(2 MB)

In this paper the interaction between FX markets driven by trading based on behavioral forecasting rules and the macroeconomy of a small open economy is investigated.

A special focus of the paper is set on the consequences of chartism or technical analysis for the stability at the macroeconomic level. Furthermore, the performance of alternative monetary policy rules concerning the overall stabilization of the economy is investigated through numerical analysis.

SCEPA
Previous

Productivity & Wages Under Technical Change
Next

Fiscal Deficits, Economic Growth, and Government Debt in the USA