IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Remarks on models of currency crises and the existance of multiple equilibria

Listed author(s):
  • Adam Koronowski
Registered author(s):

    The aim of this paper is a reconsideration of some features of first and second generation models of currency crises and some conclusions from these models. In particular, theoretical justification for the existence of multiple equilibria is put under discussion in a broader context of uncertainity and expectations. The role that different assumptions concerning government and monetary authority’s behaviour play in the determination of the results of first generation models is analyzed and thedeterministic character of these models which does not allow for multiple equilibria is explained. An explanation is suggested why equilibria can be in practice unstable when the rule of central bank’s (government’s) behaviour is not clear as it is in the models. The structure of a second generation model is analyzed with an intention to explain that for the existence of multiple equilibria there must be a convincing justification based on the game theory which the second generation lacks. It is also pointed out that an equilibrium may not exist at all. It is argued in this paper that in the world of rational expectations and perfect foresight a change of an equilibrium is possible only due to an external shock. Vulnerability of a fixed exchange rate to shocks is thus an important issue. Consequently, some features of an economy and economic policy which make fixed exchange rate vulnerable to external shocks are discussed.

    If 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.

    File URL:
    Download Restriction: no

    Paper provided by Narodowy Bank Polski, Economic Research Department in its series NBP Working Papers with number 28.

    in new window

    Length: 20
    Date of creation: 2003
    Handle: RePEc:nbp:nbpmis:28
    Contact details of provider: Postal:
    00-919 Warszawa ul. Świętokrzyska 11/21

    Phone: (0-22) 653 10 00
    Fax: (0-22) 620 85 18
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:nbp:nbpmis:28. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zbigniew Polański)

    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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.