Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society
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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

Understanding Currency Crises and Their Contagion

Vol.25, No.3, September , 30–62


English Version |  Korean Version
  •   (KAIST College of Business, Korea Advanced Institute of Science and Technology)

  •   (Economic Research Institute, The Bank of Korea)

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Abstract  

This paper discusses theoretical explanations of currency crises and the contagion from them. We provide a basic introduction to the frameworks of three classical currency crisis models and assess each model’s implications. We then introduce a global game approach in these crisis models, which helps to overcome the limits found in them. Based on our global game analysis, we explain contagion between two economies.


Keywords
   Currency Crisis, Contagion, Global Games

JEL classification codes
   C72, G01
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