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

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  • Jean-Pierre Allegret

    ()
    (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)

  • Camille Cornand

    (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines, Financial Market Group R 410 - London School of Economics and Political Sciences)

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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File URL: http://halshs.archives-ouvertes.fr/docs/00/13/74/69/PDF/Rech_Eco_Louvain_Jan_2006.pdf
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Bibliographic Info

Paper provided by HAL in its series Post-Print with number halshs-00137469.

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Date of creation: 2006
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Publication status: Published, Recherches Economiques de Louvain, 2006, 72, 3, 215-246
Handle: RePEc:hal:journl:halshs-00137469

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Related research

Keywords: Transparency ; Public and private information ; Speculative attack ; Coordination games ; Common knowledge;

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References

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Citations

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Cited by:
  1. Yin-Wong Cheung & Daniel Friedman, 2009. "Speculative Attacks: A Laboratory Study in Continuous Time," Working Papers 072009, Hong Kong Institute for Monetary Research.
  2. Dai, Meixing, 2008. "Public debt and currency crisis: how central bank opacity can make things bad?," MPRA Paper 13867, University Library of Munich, Germany.
  3. Meixing Dai, 2009. "Models of currency crises with self-fulfilling features: A comment," Working Papers of BETA 2009-14, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

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