2 edition of Speculative attacks and models of balance-of-payment crises found in the catalog.
Speculative attacks and models of balance-of-payment crises
|Statement||Pierre-Richard Agenor, Jagdeep S. Bhandari and Robert P. Flood.|
|Series||Economic research working paper series / International Monetary Fund, Research Department -- no.99, Economic research working paper (International Monetary Fund , Research Department) -- no.99.|
|Contributions||Bhandari, Jagdeep S., Flood, Robert P.|
crises and speculative attacks, along the lines ofEichengreen, Rose, and Wyplosz () and Frankel and Rose (). The aim there is to assess whether the two crises share a common macroeconomic background. The next section focuses on the definition and chronology of the crises and other events. the currency crises or speculative attack s on a currency. Studies like Eichengreen et al. ( and ), Sachs et al. () and Kaminsk y et al. () have proposed.
fectly ﬁxed exchange rate, and attribute speculative attacks to the incon-sistency and unsustainability of such policies.2 It argues that persistent over-expansionary monetary or ﬁscal policies, for example, will trigger a speculative attack, and thereby lead to a balance of payment crisis. From a. There is no universally accepted definition of a currency crisis, but most would agree that they all involve one key element: investors fleeing a currency en masse out of fear that it might be devalued, in turn fueling the very devaluation they anticipated. Although such crises—the Latin American debt crisis of the s, the speculations on European currencies in the early s, and the.
Why countries find it useful to depreciate, and why those with pegs don't. In his paper "The Logic of Currency Crises", Obstfeld introduced a model with a key realization: an attack against a currency can be triggered by self-fulfilling expectations of future depreciation. This finding stands in sharp contrast to so-called first-generation models of speculative. Abstract: This survey discusses theoretical models of speculative attack and currency crises, and reviews the empirical evidence. The paper outlines the correspondence of the models to different cases of crisis (e.g. Latin American crises, the ERM breakdown, and the recent Asian crisis), and points to gaps in the theoretical literature for.
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Speculative Attacks and Models of Balance-of-Payments Crises Pierre-Richard Agenor, Jagdeep S. Bhandari, Robert P. Flood. NBER Working Paper No.
Issued in November NBER Program(s):International Trade and Investment, International Finance and Macroeconomics This paper reviews recent developments in the theoretical and empirical analysis of balance-of-payments crises. Get this from a library.
Speculative attacks and models of balance-of-payments crises. [Pierre-Richard Agénor; Jagdeep S Bhandari; Robert P Flood; International Monetary Fund. Research Department.] -- This paper reviews recent developments in the theoretical and empirical analysis of balance-of-payments crises.
A simple analytical model highlighting the process leading to such crises is first. Speculative attacks and models of balance-of-payments crises.
Cambridge, MA: National Bureau of Economic Research,  (OCoLC) Material Type: Internet resource: Document Type: Book, Internet Resource: All Authors / Contributors: Pierre-Richard Agénor; Jagdeep S Bhandari; Robert P Flood; National Bureau of Economic Research. Balance-of-Payments Crises and Devaluation Maurice Obstfeld.
NBER Working Paper No. (Also Reprint No. r) Issued in April NBER Program(s):International Trade and Investment, International Finance and Macroeconomics The collapse of a fixed exchange rate is typically marked by a sudden balance-of-payments crisis in which"speculators" fleeing from the domestic currency acquire Cited by: This paper, then, develops a theory of crises in the balance of payments.
It is organized in six sections. Section 1 develops the macroeconomic model within which the analysis is conducted: a simple one-good, two-asset model originally expounded by Kouri .
In sections 2 and 3 the working of the model. Morton Glantz, Robert Kissell, in Multi-Asset Risk Modeling, Balance of Payments Model. The balance of payments model postulates that a foreign exchange rate in equilibrium will remain in equilibrium, providing it maintains a stable account balance.
The model is based on the expectation that foreign exchange rates are completely determined by the trade deficit (exports—imports). 1 A currency crisis usually refers to a situation in which speculative attacks force a sharp devaluation.
A balance of payments crisis is a broader concept that involves a shortage of reserves to cover balance of payments needs. This paper focuses on balance of payments crises as well as currency crises. balance of payments crisis model related to Calvo (). The model includes both tradable and nontradable goods, which allows a natural speciﬁcation of the CPI.
Extensions to second generation speculative attacks are possible. As discussed in Krugman (), these also require a commitment to intervene in the foreign exchange.
So, what is the size of the speculative attack. It is given by R T = m T m T In the context of our perfect foresight model, the speculative attack must happen on the precise date at which a run will wipe out all remaining reserves.
Moreover, on the date of the crisis there cannot be a jump in E. Since this is a perfect foresight economy, a jump in. Agenor, P-R, J. Bhandari, and R. Flood () "Speculative attacks and models of balance of payments crises" International Monetary Fund Staff Pap speculative attacks, leading to balance of payment crises (Obstfeld a, b; Edwards ; Agenor, Bhandari and Flood ).
From a policy-making perspective, these results suggest that in a persistent disequilibrium with balance-of-payment de¯cit, it is almost impossible to regain equilibrium.
In a recent article, Krugman () reviews currency crisis models, dividing them in two types: “canonical” crisis models and second-generation crisis models. While the former explains different experiences of speculative attacks, the latter seems appropriate for understanding the European monetary crisis in / In a world of high capital mobility, the threat of speculative attack becomes a central issue of macroeconomic policy.
While “ﬁrst-generation” and “second-generation” models of speculative attacks both have considerable relevance to particular ﬁnancial crises of the s, a “third-generation” model is needed to make sense of the.
This feature of the model is at the core of the first wave of contributions stressing the possibility of self-fulfilling crises. Obstfeld () recasts the Krugman model abandoning the assumption of a stable monetary policy regime and positing that a domestic credit expansion in the future only occurs conditional on a speculative attack.
Thus. A currency crisis is a situation in which serious doubt exists as to whether a country's central bank has sufficient foreign exchange reserves to maintain the country's fixed exchange crisis is often accompanied by a speculative attack in the foreign exchange market.
A currency crisis results from chronic balance of payments deficits, and thus is also called a balance of payments crisis. A currency crisis is a speculative attack on the foreign exchange value of a currency, resulting in a sharp depreciation or forcing the authorities to sell foreign exchange reserves and raise domestic interest rates to defend the currency.
This article discusses analytical models of the. The first-generation models were developed after balance-of-payment crises in Mexico (), Argentina (), and Chile (). The second-generation models arose after speculative attacks in Europe and Mexico in s.
Finally, first attempts to built the third-generation models started after the Asian crisis in depreciation forced by speculative attacks on Jamaica’s managed exchange rate system. The paper is grounded within a first generation approach (‘fundamentals approach’) to speculative attack modeling, which stresses the role played by weak economic fundamentals in inducing currency crises.
While this approach has been applied. tequila crisis, or the East Asian economies after the crises ofor Argentina after the collapse of convertibility in In all these cases the collapse of a fixed rate under speculative attack was followed by a severe contraction in the real economy.
Hence the development of third-generation models. These models – e.g. Krugman (). Downloadable (with restrictions). Speculative attacks on a pegged exchange rate must sometimes occur ifasset-price paths are to be free of abnormal profit opportunities.
Suchattacks are fully rational, as they reflect the market's response to aregime breakdown that is inevitable. The authors shows that under someexpectations about policy, balance-of-payments crises can also be purely self.
A Model of Currency Crises Banking Panics. Currency Crises A Currency Crisis (or Balance-of-payment crisis) is a sudden devaluation of a currency which often ends in a speculative attack in the foreign exchange market.
In such a situation the government is typically unable.Speculative Attacks and Risk Management⁄ Parag A. Pathaky and Jean Tirolez August 3, Abstract The paper builds a simple, micro-founded model of exchange rate management, spec-ulative attacks, and exchange rate determination.
The country may defend a peg in an.In contrast to the traditional explanations of currency crises and speculative attacks, more recent theoretical research has focused on circumstances, where, prior to the attack, the authorities are following sound monetary and fiscal policies that are consistent with the prevailing level of the exchange rate In this set-up, self.