Speculation and monetary policy behaviour in the 1992 currency crisis: the Italian case

Rosaria Rita Canale, Alberto Montagnoli () and Oreste Napolitano ()

International Economic Journal, 2008, vol. 22, issue 3, 285-297

Abstract: The paper proposes an explanation for the 1992 currency crisis as the result of monetary policy behaviour and private agents' speculation. Our analysis reveals how speculators' expectations and the behaviour of the monetary policy authority were formed on the widespread beliefs about the future value of income. We show that the real effects of monetary policy measures represent the link between the action of the central bank and speculation.

Keywords: exchange rate; financial crisis; expected income; Kalman filter (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1080/10168730802288125

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