## Speculative Attacks and Models of Balance of Payments Crises

_IMF Working Papers, October 1, 1991_

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**Canonical URL:** [Speculative Attacks and Models of Balance of Payments Crises](https://www.imf.org/en/publications/wp/issues/2016/12/30/speculative-attacks-and-models-of-balance-of-payments-crises-975)

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## Bibliographic details
- Authors: Robert P Flood, Jagdeep S. Bhandari, Pierre-Richard Agénor
- Published: October 1, 1991
- Series: IMF Working Papers

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### Overview
- Paper reviews recent developments in the theoretical and empirical analysis of balance-of-payments crises.
- A simple analytical model highlighting the process leading to such crises is developed and then extended.
- Extensions address: alternative post-collapse regimes, uncertainty, real sector effects, external borrowing and capital controls, imperfect asset substitutability, sticky prices, and endogenous policy switches.
- Empirical evidence on the collapse of exchange rate regimes is examined.
- Major implications of the analysis for macroeconomic policy are discussed.

### Analytical framework and extensions
- Core contribution: development of a simple analytical model that highlights the process leading to balance-of-payments crises.
- Extensions considered:
  - Alternative post-collapse regimes
  - Uncertainty
  - Real sector effects
  - External borrowing and capital controls
  - Imperfect asset substitutability
  - Sticky prices
  - Endogenous policy switches

### Empirical evidence
- Empirical evidence on the collapse of exchange rate regimes is examined.
- Case-related keywords in the paper include: Chilean peso, Mexican peso, regime shift.

### Policy implications
- The paper discusses major implications of the theoretical and empirical analysis for macroeconomic policy.
- Subject tags relevant to policy discussion: Conventional peg, Domestic credit, Exchange rate arrangements, Exchange rates, Foreign exchange, Money, Real exchange rates.
- Keywords relevant for policy and analysis: balance of payments, balance-of-payments crisis, credit creation, domestic credit, exchange rate commitment, exchange rate crisis, exchange rate differential time, inflation rate, money stock, nominal exchange rate, rate depreciation, real exchange rates, regime shift.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/speculative-attacks-and-models-of-balance-of-payments-crises-975_