Discrete Dynamics in Nature and Society
Volume 6 (2001), Issue 2, Pages 69-99
doi:10.1155/S1026022601000103
Asset price dynamics in a financial market with fundamentalists and chartists
1School of Finance and Economics, University of Technology, Sydney, Australia
2Facoltà di Economia, Università degli Studi di Parma, Italy
3Facoltà di Economia, Università degli Studi di Parma and Università di Urbino, Italy
Received 10 July 2000
Copyright © 2001 Carl Chairella et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract
In this paper we consider a model of the dynamics of speculative markets involving the interaction of fundamentalists and chartists. The dynamics of the model are driven by a two-dimensional map that in the space of the parameters displays regions of invertibility and noninvertibility. The paper focuses on a study of local and global bifurcations which drastically change the qualitative structure of the basins of attraction of several, often coexistent, attracting sets. We make use of the theory of critical curves associated with noninvertible maps, as well as of homoclinic bifurcations and homoclinic orbits of saddles in regimes of invertibility.