On Nash Equilibria in Speculative Attack Models

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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 crisesFixed exchange rate breakdown
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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