A note on the credibility of bank-run-preventing devaluation policies

Authors

  • Enrique Kawamura

Keywords:

JEL: G21, G28

Abstract

In this note I provide a notion of a credible devaluation policy in the context of the Chang and Velasco (2000) model. I show that when the long term asset is illiquid enough a flexible exchange rate policy is credible. It is also shown that there exists a non-trivial range for the liquidation value of the long term investment technology for which the same policy is not credible. Finally I propose a different flexible exchange rate regime which is shown to be credible.

Published

2002-12-30

Issue

Vol. 48 (2002)

Section

Articles

License

The material published in the journal is distributed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) license. This license requires proper credit to be given, a link to the license to be provided, and changes to be indicated. It does not permit commercial use of the work, and if the work is remixed, transformed, or otherwise modified, distribution of such modification is not allowed.

How to Cite

Kawamura, . E. (2002). A note on the credibility of bank-run-preventing devaluation policies. Económica, 48, p. 51-67. https://revistas.unlp.edu.ar/Economica/article/view/8515