TY - BOOK ID - 84541444 TI - Policy Implications of "Second-Generation" Crisis Models AU - Marion, Nancy. AU - Flood, Robert. PY - 1997 SN - 1462310737 1451995571 1281093157 9786613776204 1451891296 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Foreign Exchange KW - Money and Monetary Policy KW - Monetary Systems KW - Standards KW - Regimes KW - Government and the Monetary System KW - Payment Systems KW - Currency KW - Foreign exchange KW - Monetary economics KW - Conventional peg KW - Exchange rates KW - Currencies KW - Exchange rate adjustments KW - Money KW - Exchange rate devaluation KW - Mexico UR - https://www.unicat.be/uniCat?func=search&query=sysid:84541444 AB - After the speculative attacks on government-controlled exchange rates in Europe and in Mexico, economists began to develop models of currency crises with multiple solutions. In these models, a currency crisis occurs when the economy suddenly jumps from one solution to another. This paper examines one of the new models, finding that raising the cost of devaluation may make a crisis more likely. Consequently, slow convergence to a monetary union, which increases the cost to the government of reneging on an exchange rate peg, may be counterproductive. This conclusion is exactly the opposite of that obtained from earlier models. ER -