MODELS OF CURRENCY CRISES WITH SELF-FULFILLING FEATURES

Authors
OBSTFELD M
Citation
M. Obstfeld, MODELS OF CURRENCY CRISES WITH SELF-FULFILLING FEATURES, European economic review, 40(3-5), 1996, pp. 1037-1047
Citations number
27
Categorie Soggetti
Economics
Journal title
European economic review → ACNP
ISSN journal
00142921
Volume
40
Issue
3-5
Year of publication
1996
Pages
1037 - 1047
Database
ISI
SICI code
0014-2921(1996)40:3-5<1037:MOCCWS>2.0.ZU;2-6
Abstract
The discomfort a government suffers from speculation against its curre ncy determines the strategic incentives of speculators and the scope f or multiple currency-market equilibria, After describing an illustrati ve model in which high unemployment may cause an exchange-rate crisis with self-fulfilling features, the paper reviews some other self-reinf orcing mechanisms. Recent econometric evidence seems consistent with t he practical importance of these mechanisms.