Stressing the inßuence of expected devaluation on currency crises, this paper shows that, in a fixed exchange-rate system with an escape clause, partial delegation of exchange-rate policy to an inßation-averse central banker reduces the probability of crisis.

Obstfeld (1994) shows that a currency crisis can be explained by the occurrence of multiple equilibria (2 interior equilibria). For the same level of economic fundamentals, it may be optimal for the government either to devalue or to maintain the peg. The decision depends on the inßationary...

Obstfeld (1994) shows that a currency crisis can be explained by the occurrence of multiple equilibria (2 interior equilibria). For the same level of economic fundamentals, it may be optimal for the government either to devalue or to maintain the peg. The decision depends on the inßationary...

This paper attempts to explain the importance of the role of the speculators in determining the 1992 ERM crisis, and the effects that the policy of maintaining external parity had on internal growth. We focus on a different way through which expectations are formed about the macroeconomic...

This paper attempts to explain the importance of the role of the speculators in determining the 1992 ERM crisis, and the effects that the policy of maintaining external parity had on internal growth. We focus on a different way through which expectations are formed about the macroeconomic...

In this paper we construct a model of a policy game in order to analyse the optimal reaction function of the Central Bank to a shock in the asset market. In doing so, we consider three different noncooperative games: Nash equilibrium, Stackelberg equilibrium with “FED” as leader and...

In this paper we construct a model of a policy game in order to analyse the optimal reaction function of the Central Bank to a shock in the asset market. In doing so, we consider three different noncooperative games: Nash equilibrium, Stackelberg equilibrium with “FED” as leader and...

In this paper we extend the Murray and Papell (2002) study by using a non-parametric bootstrap approach which allows for non-normality, and focusing on quarterly real exchange rate in twenty OECD countries in the post-1973 floating period. We run Augmented Dickey-Fuller (ADF) regressions, and...

This paper proposes a new procedure for analyzing volatility links between different markets based on a bivariate Markov switching model. An empirical application of this procedure to three emerging markets is examined and discussed.

In this paper we examine whether during the 1997 East Asian crisis there was any contagion from the four largest economies in the region (Thailand, Indonesia, Korea and Malaysia) to a number of developed countries (Japan, UK, Germany and France).Following Forbes and Rigobon (2002), we test for...