Devaluation without common knowledge
AbstractIn an economy with a fixed exchange rate regime that suffers a random adverse shock, we study the strategies of imperfectly and sequentially informed speculators that may trigger an endogenous devaluation before it occurs exogenously. The game played by the speculators has a unique symmetric Nash equilibrium which is a strongly rational expectation equilibrium in the set of all strategies with delay. Uncertainty about the extent to which the Central Bank is ready to defend the peg extends the ex ante mean delay between the exogenous shock and the devaluation. We determine endogenously the rate of devaluation. Forthcoming in the Journal of International Economics
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Oxford Financial Research Centre in its series OFRC Working Papers Series with number 2006fe03.
Date of creation: 2006
Date of revision:
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Andrew Feltenstein & Celine Rochon, 2008.
"Can Good Events Lead to Bad Outcomes? Endogenous Banking Crises and Fiscal Policy Responses,"
Economics Series Working Papers
2008fe03, University of Oxford, Department of Economics.
- Feltenstein, Andrew & Rochon, Céline, 2009. "Can good events lead to bad outcomes? Endogenous banking crises and fiscal policy responses," Journal of Asian Economics, Elsevier, vol. 20(4), pages 396-409, September.
- CÃ©line Rochon & Andrew Feltenstein, 2006. "Can Good Events Lead to Bad Outcomes? Endogenous Banking Crises and Fiscal Policy Responses," IMF Working Papers 06/263, International Monetary Fund.
- Andrew Feltenstein & CÃ©line Rochon, 2008. "Can Good Events Lead to Bad Outcomes? Endogenous Banking Crises and Fiscal Policy Responses," OFRC Working Papers Series 2008fe03, Oxford Financial Research Centre.
- Yin-Wong Cheung & Daniel Friedman, 2009.
"Speculative Attacks: A Laboratory Study in Continuous Time,"
072009, Hong Kong Institute for Monetary Research.
- Cheung, Yin-Wong & Friedman, Daniel, 2009. "Speculative attacks: A laboratory study in continuous time," Journal of International Money and Finance, Elsevier, vol. 28(6), pages 1064-1082, October.
- Yin-Wong Cheung & Daniel Friedman, 2008. "Speculative Attacks: A Laboratory Study in Continuous Time," CESifo Working Paper Series 2420, CESifo Group Munich.
- Mei Li & Frank Milne, 2007. "The Role of Large Players in a Dynamic Currency Attack Game," Working Papers 1148, Queen's University, Department of Economics.
- Broner, Fernando A, 2006.
"Discrete Devaluations and Multiple Equilibria in a First Generation Model of Currency Crises,"
CEPR Discussion Papers
5876, C.E.P.R. Discussion Papers.
- Broner, Fernando A., 2008. "Discrete devaluations and multiple equilibria in a first generation model of currency crises," Journal of Monetary Economics, Elsevier, vol. 55(3), pages 592-605, April.
- Fernando A. Broner, 2004. "Discrete Devaluations and Multiple Equilibria in a First Generation Model of Currency Crises," 2004 Meeting Papers 264, Society for Economic Dynamics.
- Fernando A. Broner, 2004. "Discrete Devaluations and Multiple Equilibria in a First Generation Model of Currency Crises," Working Papers 186, Barcelona Graduate School of Economics.
- Fernando Broner, 2003. "Discrete devaluations and multiple equilibria in a first generation model of currency crises," Economics Working Papers 839, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 2007.
- Fernando A Broner, 2006. "Discrete Devaluations and Multiple Equilibria in a First Generation Model of Currency Crises," Working Papers 309, Barcelona Graduate School of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maxine Collett).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.