On Nash Equilibria in Speculative Attack Models
|Title:||On Nash Equilibria in Speculative Attack Models||Authors:||Pastine, Ivan||Permanent link:||http://hdl.handle.net/10197/7925||Date:||Sep-2016||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.||Type of material:||Working Paper||Publisher:||University College Dublin. School of Economics||Start page:||1||End page:||24||Series/Report no.:||UCD Centre for Economic Research Working Paper Series; WP2016/13||Keywords:||Balance-of-payments crises; Fixed exchange rate breakdown||Language:||en||Status of Item:||Not peer reviewed|
|Appears in Collections:||Economics Working Papers & Policy Papers|
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