The financial crisis in southeast Asia and speculative attacks on exchangerates

The article presents a model intended to describe some basic features of th e financial crisis in southeastern Asia during the period 1997-1998. It is assumed that in order to understand the crisis, some emphasis has to be giv en to (i) the incentives a given government has when evaluating exchange ra te policy and (ii) the health of the domestic financial system. It is a cru cial feature of the model that it provides an example of a situation where several equilibria in a future period can lead to a speculative attack on t he currency even in the present period.