Chaotic dynamics in a flexible exchange rate system: a study of noise effects (Q5929115)

Summary: We investigate by means of an analytical method and numerical simulations the properties of three-dimensional business cycle model, in which the foreign exchange rate is flexible and a parameter is fluctuated by noise. The model is a discrete time version of continuous time open economy model without noise. [\textit{T. Asada}, J. Econ. 62, No. 3, 239-269 (1995; Zbl 0861.90024)]. We show (1) noise may suppress the burst of flexible foreign exchange rate when its behavior begins to burst as a bifurcation parameter (adjustment speed of the goods market) is increased, (2) the windows of cycles can be broken by noise, and (3) noise may reveal the hidden structures.