Speculative Attack and Informational Structure: An Experimental Study

This paper addresses the question whether public information destabilises the economy in the context of signals of different nature. We present an experiment on the speculative attack game of Morris and Shin (1998). Our objective is double: (i) evaluating whether public information destabilises the economy in a context of signals of different nature; and (ii) enlarging the results of Heinemann, Nagel and Ockenfels (2002). Our evidence suggests that in sessions with both private and common signals, the fact that the public signal plays a focal role enhances the central bank's welfare: it reduces the probability of crisis and increases its predictability. In terms of economic policy, the central bank has more control on the beliefs of traders if it discloses one clear signal when agents also get private information from other sources.