makers defend it, they seldom model how this is done. We incorporate themechanics of speculation and the interest rate … defence against it in the model ofMorris and Shin (American Economic Review 88, 1998). Our model captures that the interest … rate defence reduces speculators’ profits and thus postpones the crisis. It predicts that well before the fall of a …

makers defend it, they seldom model how this is done. We incorporate themechanics of speculation and the interest rate … defence against it in the model ofMorris and Shin (American Economic Review 88, 1998). Our model captures that the interest … rate defence reduces speculators’ profits and thus postpones the crisis. It predicts that well before the fall of a …