Year-end Sale % OFF 
Abstract
This paper proposes an empirical approach to euro-dollar rate modeling based on continuous-time dynamic systems. It is shown that the dynamics of the exchange rate and key policy rates of Federal Reserve System and European Central Bank (which are supposed to be the main drivers of the euro-dollar rate) has displayed several regimes in the past, and these regimes can be successfully modeled in terms of linear differential equations. The Grobman-Hartman theorem is used to reconstruct the fundamental nonlinear law of motion of the exchange rate. Linear systems are considered as approximations of a nonlinear system in the neighborhood of its steady states. This approach allows reveal all possible regimes of exchange rate dynamics.
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
