We explore the role of expectations in second generation currency crisis models, proving that sudden shifts in speculators' beliefs can trigger currency devaluations, even without any sizable worsening in the fundamentals. In our incomplete information game, mean-preserving changes in...

The empirical work on the role of trade linkages in the transmission of economic disturbances has been limited to tests on the significance of variables of simple trade shares of partners, both bilateral and in common markets. This approach ignores additional elements deriving from the new open...