Cornand, Camille and Heinemann, Frank (2006) Speculative attacks with multiple sources of public information. Discussion paper, 570. Financial Markets Group, London School of Economics and Political Science, London, UK.
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We propose a speculative attack model in which agents receive multiple public signals. It is characterised by its focus on an informational structure, which sets free from the strict separation between public information and private information. Diverse pieces of public information can be taken into account differently by players and are likely to lead to different appreciations ex post. This process defines players’ private value. The main result is to show that equilibrium uniqueness depends on two conditions: (i) signals are sufficiently dispersed (ii) private beliefs about the relative precision of these signals sufficiently differ. We derive some implications for information dissemination policy. Transparency in this context is multi-dimensional: it concerns the publicity of announcements, the number of signals disclosed as well as their precision. Especially, it seems that the central bank has better not publishing its forecast errors in order to maintain stability. An illustration to our analysis is the recent debate concerning the optimal monetary policy committee structure of central banks.
|Item Type:||Monograph (Discussion Paper)|
|Additional Information:||© 2006 The Authors|
|Uncontrolled Keywords:||Speculative attack, Coordination game, Multiple equilibria, Public and private information, Transparency|
|Library of Congress subject classification:||H Social Sciences > HB Economic Theory|
|Journal of Economic Literature Classification System:||F - International Economics > F3 - International Finance > F31 - Foreign Exchange
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information
|Sets:||Research centres and groups > Financial Markets Group (FMG)
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