Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/40288
Authors: 
Metz, Christina E.
Year of Publication: 
2000
Series/Report no.: 
Research notes in economics & statistics 00-7
Abstract: 
This paper analyzes the implications of currency crises in a model with unique equilibrium. Starting from a typical multiple equilibria model with self-fulfilling expectations we introduce noisy information, following Morris/Shin (1999). Under certain conditions for the noise parameter, all equilibria but one are eliminated so that we are able to derive comparative statics and subsequent policy devices. We can show that if the a priori expected fundamental state of the economy is good, there is an incentive for the government to disseminate very precise information. However, a high precision of public information increases the danger of an attack if ex-ante expected fundamentals are bad. Moreover, we find that the influence of private information's precision is exactly the reverse.
Subjects: 
Currency Crises
Common Knowledge
Multiple Equilibria
JEL: 
F31
D82
Document Type: 
Working Paper

Files in This Item:
File
Size
753.34 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.