Speculative Bubbles Speculative Attacks And Policy Switching
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Speculative Bubbles Speculative Attacks And Policy Switching
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Author : Robert P. Flood
language : en
Publisher: MIT Press
Release Date : 1994
Speculative Bubbles Speculative Attacks And Policy Switching written by Robert P. Flood and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 1994 with Business & Economics categories.
The papers in this book are grouped into three sections: the first on price bubbles is primarily financial; the second on speculative attacks (on exchange rate regimes) is international in scope; and the third, on policy switching, is concerned with monetary policy.
Rational Speculative Bubbles In An Exchange Rate Target Zone
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Author : Willem H. Buiter
language : en
Publisher:
Release Date : 1990
Rational Speculative Bubbles In An Exchange Rate Target Zone written by Willem H. Buiter and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1990 with Commerce categories.
The recent theory of exchange rate dynamics within a target zone holds that exchange rates under a currency bard are less responsive to fundamental shocks than exchange rates under a free float, provided that the intervention rules of the Central Bank(s) are common knowledge. These results are derived after having assumed a priori that excess volatility due to rational bubbles does not occur in the foreign exchange market. In this paper we consider instead a setup in which the existence of speculative behavior is a datum the Central Bank has to deal with. We show that the defense of the target zone in the presence of bubbles is viable if the Central Bank accommodates speculative attacks when the latter are consistent with the survival of the target zone itself and expectations are self-fulfilling. These results hold for a large class of exogenous and fundamental-dependent bubble processes. We show that the instantaneous volatility of exchange rates within a bard is not necessarily less than the volatility under free float and analyze the implications for interest rate differential dynamics.
Self Fulfilling Risk Predictions
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Author : Robert P. Flood
language : en
Publisher: International Monetary Fund
Release Date : 1998-08
Self Fulfilling Risk Predictions written by Robert P. Flood and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1998-08 with Business & Economics categories.
Currency crises in Europe and Mexico, as well as those unfolding in Asia, have renewed efforts to understand and control the forces underlying speculative attacks on fixed exchange rates. Until the European crises in 1992-93, there was general agreement about the underlying cause of speculative attacks. A country would ultimately face an attack if it ran macroeconomic policies inconsistent in the longer term with the fixed exchange rate. For example, if a government monetized a large fiscal deficit, excessive money growth would cause its international reserve holdings to decline and eventually trigger an attack by speculators. The government would be forced to abandon the fixed exchange rate and let the currency depreciate. The view that deteriorating fundamentals led to currency crises was formalized in a set of "first-generation" crisis models.1
Early Speculative Bubbles And Increases In The Supply Of Money
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Author :
language : en
Publisher: Ludwig von Mises Institute
Release Date : 2009-03-16
Early Speculative Bubbles And Increases In The Supply Of Money written by and has been published by Ludwig von Mises Institute this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-03-16 with Business & Economics categories.
The Housing Bubble was hardly the first in human history. What's eluded historians is the same issue that eludes commentators today: the underlying cause of bubbles. This book is the first (and only) book to solve the mystery of the most famous bubble in world history: Tulipmania in 17th century Netherlands. It Is a legendary event but explanations have been lacking. People blame irrational exuberance, free markets, and an unleashed aristocracy. Douglas French takes a different route: he follows the money to prove that the bubble resulted from a government intervention that dramatically exploded the money supply and fueled the tulip-price bubble – not altogether different from modern bubbles. This book was French’s Master’s thesis written under the direction of Murray Rothbard and examining three of the most famous speculative bubble episodes in history through the lens of Austrian Business Cycle Theory. Although each of these episodes is well documented, this book examines the monetary interventions that engendered each of these events showing that not only the Mississippi Bubble and the South Sea Bubble were caused by government meddling, but Tulipmania was as well. Tulipmania was unique in that it was the sound money policy of the Dutch combined with free coinage laws that led to an acute increase in the supply of money and fostered an atmosphere that was ripe for speculation and malinvestment, manifesting itself in the intense trading of tulip bulbs. The author examines not only the Mississippi Bubble but also the life and monetary theories of its architect, John Law. Professor Joe Salerno calls Law the world’s first macroeconomist who implemented a Keynesian monetary system in France nearly two hundred years before Keynes was born. At the same time across the English Channel, a nearly bankrupt British government looked on with envy at Law’s system, believing that he was working a financial miracle. It was anything but this and investors in both countries were devastated. Although these episodes occurred centuries ago, readers will find the events eerily similar to today’s bubbles and busts: low interest rates, easy credit terms, widespread public participation, bankrupt governments, price inflation, frantic attempts by government to keep the booms going, and government bailouts of companies after the crash. When will we learn? We first have to get cause and effect in history straight. This book is an excellent contribution to that effort.
Policy Making And Speculative Attacks In Models Of Exchange Rate Crisis A Synthesis
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Author : Lilia Cavallari
language : en
Publisher:
Release Date : 1996
Policy Making And Speculative Attacks In Models Of Exchange Rate Crisis A Synthesis written by Lilia Cavallari and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1996 with categories.
Identifying Speculative Bubbles
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Author : Bradley Jones
language : en
Publisher: International Monetary Fund
Release Date : 2014-11-19
Identifying Speculative Bubbles written by Bradley Jones and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-11-19 with Business & Economics categories.
In the aftermath of the global financial crisis, the issue of how best to identify speculative asset bubbles (in real-time) remains in flux. This owes to the difficulty of disentangling irrational investor exuberance from the rational response to lower risk based on price behavior alone. In response, I introduce a two-pillar (price and quantity) approach for financial market surveillance. The intuition is straightforward: while asset pricing models comprise a valuable component of the surveillance toolkit, risk taking behavior, and financial vulnerabilities more generally, can also be reflected in subtler, non-price terms. The framework appears to capture stylized facts of asset booms and busts—some of the largest in history have been associated with below average risk premia (captured by the ‘pricing pillar’) and unusually elevated patterns of issuance, trading volumes, fund flows, and survey-based return projections (reflected in the ‘quantities pillar’). Based on a comparison to past boom-bust episodes, the approach is signaling mounting vulnerabilities in risky U.S. credit markets. Policy makers and regulators should be attune to any further deterioration in issuance quality, and where possible, take steps to ensure the post-crisis financial infrastructure is braced to accommodate a re-pricing in credit risk.
Soft Exchange Rate Bands And Speculative Attacks
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Author : Mr.Alessandro Prati
language : en
Publisher: International Monetary Fund
Release Date : 1998-11-01
Soft Exchange Rate Bands And Speculative Attacks written by Mr.Alessandro Prati and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1998-11-01 with Business & Economics categories.
We present a model of a “soft” exchange rate target zone and interpret it as a stylized description of the post-August 1993 ERM. Our central bank targets a moving average of the current and past exchange rates, rather than the exchange rate’s current level, thus allowing the rate to move within wide margins in the short run, but within narrow margins in the long run. For realistic parameters, soft target zones are significantly less vulnerable to speculative attacks than “hard” target zones. These predictions are consistent with the ERM’s experience and the abatement of speculative pressure in European markets since the bands’ widening in 1993.
Speculative Attacks On Pegged Exchange Rates
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Author : Barry J. Eichengreen
language : en
Publisher:
Release Date : 1994
Speculative Attacks On Pegged Exchange Rates written by Barry J. Eichengreen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1994 with EMS categories.
Speculative Attacks And Models Of Balance Of Payments Crises
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Author : Mr.Robert P. Flood
language : en
Publisher: International Monetary Fund
Release Date : 1991-10-01
Speculative Attacks And Models Of Balance Of Payments Crises written by Mr.Robert P. Flood and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1991-10-01 with Business & Economics categories.
This paper reviews recent developments in the theoretical and empirical analysis of balance-of-payments crises. A simple analytical model highlighting the process leading to such crises is first developed. The basic framework is then extended to deal with a variety of issues, such as: alternative post-collapse regimes, uncertainty, real sector effects, external borrowing and capital controls, imperfect asset substitutability, sticky prices, and endogenous policy switches. Empirical evidence on the collapse of exchange rate regimes is also examined, and the major implications of the analysis for macroeconomic policy discussed.
International Finance And Financial Crises
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Author : Mr.Peter Isard
language : en
Publisher: International Monetary Fund
Release Date : 2000-01-24
International Finance And Financial Crises written by Mr.Peter Isard and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000-01-24 with Business & Economics categories.
This book contains the proceedings of a conference held in honor of Robert P. Flood Jr. Contributors to the conference were invited to address many of the topics that Robert Flood has explored including regime switching, speculative attacks, bubbles, stock market voloatility, macro models with nominal rigidities, dual exchange rates, target zones, and rules versus discretion in monetary policy. The results, contained in this volume, include five papers on topics in international finance.