Browsing by Subject "Nominal anchor"
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Item Open Access Speculation and the decision to abandon a fixed exchange rate regime(Elsevier BV, 2002) Pastine, I.This paper demonstrates that the implications of first-generation speculative attack models do not hold if there is a rational, forward-looking policy maker. The policy maker will be able to avoid predictable speculative attacks by introducing uncertainty into the decisions of speculators. This changes the sudden attack into a prolonged period of increasing speculation and uncertainty. In addition, the model provides useful insights into the viability of temporary nominal anchor policies, and a theoretical foundation for a useful empirical methodology. © 2002 Elsevier Science B.V. All rights reserved.