Studies in the theory of balance-of-payments crises

Preface 5

1 Introduction 9

2 A Survey of the Literature on Balance-of-Payments Crises 11
2.1 A balance-of-payments crisis in the F-G model 11
2.2 Extensions of the analysis and further results 13
2.2.1 Balance-of-payments crises in intertemporal. optimization models 15
2.2.2 The minimum level of net foreign reserves 17
2.2.3 Balance-of-payments crises and devaluation 19
2.2.4 Imperfect foresight and balance-of-payments crises 20
2.2.4.1 Stochastic models of balance-of- payments crises 20
2.2.4.2 Uncertainty in deterministic models of balance-of-payments. crises 22
2.2.5 Stabilization policies and balance-of- payments crises 25
2.2.6 Capital controls, imperfect asset substitutability and balance-of-payments crises 27
2.2.7 Real output, prices and wages and balance-of-payments crises 28
2.2.8 Other extensions of the analysis 30

3 Summaries of the Papers 31
3.1 Why there is a lower bound on the central bank's foreign reserves 32
3.2 Speculative attacks on the currency with uncertain monetary policy reactions 35
3.3 Balance-of-payments crises and monetary policy reactions in a model with imperfect substitutability between domestic and foreign bonds 37
3.4 Devaluation expectations and speculative attacks on the currency 39
3.5 The collapse of the fixed exchange rate regime with sticky wages and imperfect substitutability between domestic and foreign bonds 42

Notes 45
References 47
Appendix 52