In the late 1980s, as the empirical appeal of macro-economic exchange rate models began to fade, a few people including Professor Charles Goodhart at the London School of Economics and researchers at Olsen & Associates in Zurich, started to collect intra-daily exchange rate data. The resulting...

The prevailing exchange rate and its volatility has been always an important issue in an open economy and freely floating exchange rate system, such as in Indonesia. In this system, the exchange rate is allowed to fluctuate based on the interaction between demand for and supply of foreign...

Rational expectations models fail to explain the disconnect between the exchange rate and macroeconomic fundamentals. In line with survey evidence on the behaviour of foreign exchange traders, we introduce model misspecification and learning into a standard monetary model. Agents use simple...