Models of Speculative Attacks and Crashes in International Capital Markets

Giancarlo Marini () and Giovanni Piersanti ()

No 245, CEIS Research Paper from Tor Vergata University, CEIS

Abstract: Currency and financial turmoils in international capital markets have been the focus of an extensive theoretical research which started around 30 years ago. This paper provides a synthetic overview of this theoretical modeling. We analyze the basic analytical framework corresponding to the dominant theoretical approaches, and discuss their extensions to include the financial sector, contagion across markets and countries, capital flows and borrowing constraints, strategic interactions among agents and equilibrium selection. In the final section we focus on the relevant policy issue of crisis prevention and optimal foreign regime choice in a world of full financial integration.

Keywords: Exchange Rate Regimes; Speculative Attacks; Currency Crises; Financial Crises; Global Games (search for similar items in EconPapers)
JEL-codes: F30 F31 F32 F33 F41 G01 C70 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mon
Date: 2012-07-24, Revised 2012-07-24
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