Currency crises, sunspots and exchange-rate overshooting
This paper provides a macroeconomic framework for theoretical and empirical analysis of the role of sunspots and shock-dependent expectations in currency crises. The model distinguishes between macroeconomic fundamentals and shock expectations as cause of currency crises. It is assumed that good pri...
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| Format: | Journal Article |
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World Business Institute
2009
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| Online Access: | http://hdl.handle.net/20.500.11937/43889 |
| _version_ | 1848756838520061952 |
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| author | Inchauspe, Julian |
| author_facet | Inchauspe, Julian |
| author_sort | Inchauspe, Julian |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | This paper provides a macroeconomic framework for theoretical and empirical analysis of the role of sunspots and shock-dependent expectations in currency crises. The model distinguishes between macroeconomic fundamentals and shock expectations as cause of currency crises. It is assumed that good prices are sticky so that the economy responds to information through the exchange rate or, when it is fixed or managed, through the interest rate. I argue that, under certain conditions, pessimistic expectations can be strong enough to self-validate and bring about crises. |
| first_indexed | 2025-11-14T09:18:34Z |
| format | Journal Article |
| id | curtin-20.500.11937-43889 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T09:18:34Z |
| publishDate | 2009 |
| publisher | World Business Institute |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-438892017-02-28T01:47:32Z Currency crises, sunspots and exchange-rate overshooting Inchauspe, Julian foreign exchange Economic policy macroeconomics international economics This paper provides a macroeconomic framework for theoretical and empirical analysis of the role of sunspots and shock-dependent expectations in currency crises. The model distinguishes between macroeconomic fundamentals and shock expectations as cause of currency crises. It is assumed that good prices are sticky so that the economy responds to information through the exchange rate or, when it is fixed or managed, through the interest rate. I argue that, under certain conditions, pessimistic expectations can be strong enough to self-validate and bring about crises. 2009 Journal Article http://hdl.handle.net/20.500.11937/43889 World Business Institute restricted |
| spellingShingle | foreign exchange Economic policy macroeconomics international economics Inchauspe, Julian Currency crises, sunspots and exchange-rate overshooting |
| title | Currency crises, sunspots and exchange-rate overshooting |
| title_full | Currency crises, sunspots and exchange-rate overshooting |
| title_fullStr | Currency crises, sunspots and exchange-rate overshooting |
| title_full_unstemmed | Currency crises, sunspots and exchange-rate overshooting |
| title_short | Currency crises, sunspots and exchange-rate overshooting |
| title_sort | currency crises, sunspots and exchange-rate overshooting |
| topic | foreign exchange Economic policy macroeconomics international economics |
| url | http://hdl.handle.net/20.500.11937/43889 |