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Agents’ Rationality and the CHF/USD Exchange Rate

Agents’ Rationality and the CHF/USD Exchange Rate

Part III

This is Part III of a series of papers on ”Agents’ Rationality and the CHF/USD Exchange Rate”. The series contains a special approach to model the logarithmic CHF/USD monthly exchange rate s t .
Economic theories tend to interpret agents’ rationality as some kind of mechanical process representing an ”as if” mechanism often using utility functions. By way of contrast the author analyzes agents’ rationality (at foreign exchange markets), bringing cognitive processes and social practices into the picture.
The paper revises a theoretical model by B.T. McCallum [?] discussed earlier, incorporating new aspects of agents’ rationality as introduced in this paper and the previous parts. As we still discover some shortcomings of the revised model, an additional specification analysis will be undertaken in a fourth paper.