Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/63148 
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dc.contributor.authorMundaca, B. Gabrielaen
dc.contributor.authorStrand, Jonen
dc.date.accessioned2012-09-20T13:15:50Z-
dc.date.available2012-09-20T13:15:50Z-
dc.date.issued1999-
dc.identifier.urihttp://hdl.handle.net/10419/63148-
dc.description.abstractWe model the exchange rate market for a country that initially follows a band policy, as a four-stage sequential game of complete information, where a stochastic shock is realized in the last stage. Given a fixed cost of leaving the band, we show that three types of equilibria may exist, corresponding to different expectations by the public about the government retaining the band, (1) in all future states, (2) only in some future states, and (3) in none of the states. In case (2) a speculative attack occurs but is countered when the cost of countering it is not too high, leading to adverse shifts in fundamentals. We study the government’s incentives to abandon or retain the band, and to abandon the band preemptively before public expectations are revealed. The standard Krugman and Obstfeld models are obtained as special cases, respectively when we have regime collapse as a unique equilibrium, and when there are multiple equilibria and the game always progresses to stage 4.en
dc.language.isoengen
dc.publisher|aUniversity of Oslo, Department of Economics |cOsloen
dc.relation.ispartofseries|aMemorandum |x1999,01en
dc.subject.jelF31en
dc.subject.jelF33en
dc.subject.ddc330en
dc.subject.keywordCurrency crisisen
dc.subject.keywordmultiple equilibriaen
dc.subject.keywordsequential gamesen
dc.subject.keywordunemploymenten
dc.subject.stwDevisenmarkten
dc.subject.stwDevisenspekulationen
dc.subject.stwTheorieen
dc.titleSpeculative attacks in the exchange market with a band policy: A sequential game analysis-
dc.typeWorking Paperen
dc.identifier.ppn323415237en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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