Balance-of-payments crises are studied in a framework where investors do not know the threshold level of foreign reserves, the attainment of which implies that the central bank abandons its fixed exchange target. Investors are alternatively risk neutral or risk averse. It is shown that, depending on whether the threshold level is stochastic or fixed, but unknown to investors, currency speculation reveals itself as, respectively, a speculative outflow distributed over a longer time period or a sudden speculative attack on the currency. Copyright 1989 by The editors of the Scandinavian Journal of Economics.
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