Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks

Stephen Morris and Hyun Song Shin

Economics Papers from Economics Group, Nuffield College, University of Oxford

Abstract: Even though self-fulfilling currency attacks lead to multiple equilibria when fundamentals are common knowledge, we demonstrate the uniqueness of equilibrium when speculators face a small amount of noise in their signals about the fundamentals. This unique equilibrium depends not only on the money in criculation and the costs of speculative trading. In contrast to multiple equilibrium models, our model allows analysis of policy proposals directed at curtailing currency attacks.

Keywords: EXCHANGE RATE; INFORMATION (search for similar items in EconPapers)
JEL-codes: D82 F31 (search for similar items in EconPapers)
Pages: 24 pages
Date: 1996
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Citations: View citations in EconPapers (72)

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Related works:
Journal Article: Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks (1998)
Working Paper: Unique Equilibrium in a Model of Self-fulfilling Currency Attacks (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:nuf:econwp:126

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