Self-Fulfilling Risk Predictions : An Application to Speculative Attacks /

The paper shows that changing market beliefs about currency risk can generate a self-fulfilling speculative attack on a fixed exchange rate. The attack does not require a later change in policies to make it profitable. This is illustrated by introducing an endogenous risk premium into a 'first-...

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Bibliographic Details
Main Author: Flood, Robert
Other Authors: Marion, Nancy
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 1998.
Series:IMF Working Papers; Working Paper ; No. 1998/124
Online Access:Full text available on IMF