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The Pros and Cons of Higher Transparency: The Case of Speculative Attacks

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Author Info
Jean-Pierre Allegret () (GATE CNRS)
Camille Cornand () (GATE CNRS)
Abstract

The aim of this paper is to evaluate to what extent more transparency can reduce the occurrence of speculative attacks. It proposes a survey of the literature about the pros and cons of transparency on the exchange rate market, which is one of the main pillars of the new international financial architecture. The effects of transparency are shown to be ambiguous both from a theoretical and empirical point of views. However, the imperfect connection resulting from the confrontation between theory and empirics suggests that some new insights are necessary in order to better catch stylised facts on the one hand and to better evaluate the theory on the other, as has been done in recent literature. This leads to new proposals for economic and informational policies.

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Publisher Info
Paper provided by Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure in its series Working Papers with number 0502.

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Length: 32 pages
Date of creation: Nov 2005
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Handle: RePEc:gat:wpaper:0502

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Related research
Keywords: Transparency Public and private info Speculative attack Coordination games Common knowledge

Find related papers by JEL classification:
C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
F31 - International Economics - - International Finance - - - Foreign Exchange

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References listed on IDEAS
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  18. Sbracia, Massimo & Zaghini, Andrea, 2001. "Expectations and information in second generation currency crises models," Economic Modelling, Elsevier, vol. 18(2), pages 203-222, April. [Downloadable!] (restricted)
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  22. Camille Cornand & Frank Heinemann, 2005. "Speculative Attacks with Multiple Sources of Public Information," Discussion Papers 157, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
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  28. Petra M. Geraats, 2002. "Central Bank Transparency," Economic Journal, Royal Economic Society, vol. 112(483), pages 532-565, November. [Downloadable!] (restricted)
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