The swiftness and devastating impact of recent financial crises have taken many market participants by surprise, and pose challenges for economists seeking a theory of the onset of a crisis. We propose such a theory based on two features. The actions of diverse economic actors which undermine...

The appropriate stance of monetary policy during speculative attacks has been the source of much controversy. According to the `traditional view`, a tighter monetary policy is necessary to discourage the outflow of capital, and thus prevent the exchange rate from depreciating. The `revisionist...

Analyses of the Asian crisis have focused excessively on the financial sector, especially the banks. The role of the real sector in exposing the financial system to stress has been under-emphasized. This paper provides a real-sector explanation for the Thai crisis of 1997, demonstrating the role...