Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/175472 
Authors: 
Year of Publication: 
2016
Series/Report no.: 
UCD Centre for Economic Research Working Paper Series No. WP16/13
Publisher: 
University College Dublin, UCD School of Economics, Dublin
Abstract: 
Since a fixed exchange rate regime is a fixed price system, there is no theoretical reason to presume that the foreign exchange market clears, particularly during a speculative attack. This paper shows that equilibria where we allow for the possibility of such corner solutions are a superset of the previously examined "market-clearing" equilibria. The timing of the balance-of-payments crisis is no longer predictable in the same sense - multiple equilibria exist even in the very simplest speculative attack model.
JEL: 
F31
E58
Document Type: 
Working Paper

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