The Role of Domestic and Foreign Investors in a Simple Model of Speculative Attacks:

We introduce local and foreign investors in a simple model of speculative attacks. Local investors have less tolerance for overvaluation of the fixed exchange rate because they tend to incur lower costs when taking a short position and possess better information, and because of moral hazard created...

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Bibliographische Detailangaben
1. Verfasser: Diks, Cees G. H. (VerfasserIn)
Format: Elektronisch E-Book
Sprache:English
Veröffentlicht: Washington, D.C International Monetary Fund 2005
Schriftenreihe:IMF Working Papers Working Paper No. 05/205
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Volltext
Zusammenfassung:We introduce local and foreign investors in a simple model of speculative attacks. Local investors have less tolerance for overvaluation of the fixed exchange rate because they tend to incur lower costs when taking a short position and possess better information, and because of moral hazard created by discriminatory government guarantees. On the other hand, the prospect of higher taxation after a balance of payments crisis deters speculation by locals compared to foreign investors. Finally, the lower the degree of exchange rate pass-through, the more likely domestic investors are tp take the lead during capital flight
Beschreibung:1 Online-Ressource (24 p)
ISBN:1451862245
9781451862249

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