Economic models of speculative attacks and the drachma crisis of May 1994
Speculative attacks on fixed or â€˜fixed but adjustableâ€™ exchange rate regimes seem to have become a standard feature of the landscape of foreign exchange markets. The supposed excesses of seemingly untethered financial markets have been documented for some time, but only recently have the concerted attacks by speculators on exchange-rate regimes begun to occupy the popular imagination.Economic models of this phenomenon, however, have been around for some time, and are useful in characterizing the real-world speculative attacks that have occurred in the last 10â€“15 years in a number of countries. In this paper, we provide a brief overview of one such model. We also sketch some implications of that model for the speculative attack on the Greek drachma in May 1994. Copyright Kluwer Academic Publishers 1996
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- Blanco, Herminio & Garber, Peter M, 1986. "Recurrent Devaluation and Speculative Attacks on the Mexican Peso," Journal of Political Economy, University of Chicago Press, vol. 94(1), pages 148-66, February.
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