Skip to main content
Article thumbnail
Location of Repository

Risk and wealth in a model of self-fulfilling currency attacks

By Bernardo Guimaraes and Stephen Morris

Abstract

Market participants’ risk attitudes, wealth and portfolio composition influence their positions in a pegged foreign currency and, therefore, may have important effects on the sustainability of currency pegs. This paper analyzes such effects in a global game model of currency crises with continuous action choices, generating a rich set of theoretical comparative static predictions related to often discussed but rarely modelled accounts of currency attacks. The model can be solved in closed form and the methods could be used to study other economic issues in which coordination and risk aversion play important roles

Topics: HB Economic Theory
Publisher: Elsevier
Year: 2007
DOI identifier: 10.1016/j.jmoneco.2007.07.005
OAI identifier: oai:eprints.lse.ac.uk:4756
Provided by: LSE Research Online
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://www.sciencedirect.com/s... (external link)
  • http://eprints.lse.ac.uk/4756/ (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.