The role of (non-)transparency in a currency crisis model

This paper extends the work by Morris and Shin (Am. Econom. Rev. 88 (1998) 587–597) where multiple equilibria in the self-fulfilling currency attack models can be reduced to a unique equilibrium when agents observe fundamentals privately with small errors. We find that under a more general specification with realistic parameters, noisy private observations are generally insufficient to prevent the multiplicity of equilibria. The pivotal role …