Models of Currency Crises with Self-fulfilling Features

Maurice Obstfeld

No 1315, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The discomfort a government suffers from speculation against its currency determines the strategic incentives of speculators and the scope for multiple currency-market equilibria. After describing an illustrative model in which high unemployment may cause an exchange rate crisis with self-fulfilling features, the paper reviews some other self-reinforcing mechanisms. Recent econometric evidence seems to support the practical importance of these mechanisms.

Keywords: Balance-of-payments Crisis; Fixed Exchange Rate; Multiple Equilibria; Speculative Attack (search for similar items in EconPapers)
JEL-codes: E58 F33 (search for similar items in EconPapers)
Date: 1996-01
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Journal Article: Models of currency crises with self-fulfilling features (1996)
Working Paper: Models of Currency Crises with Self-Fulfilling Features (1995)
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