Bacchetta, Philippe; Tille, Cedric; Wincoop, Eric van - In: American Economic Review 101 (2011) 3, pp. 410-12
There has been a long debate about whether speculators are stabilizing or not. We consider a model where speculators have a stabilizing role in normal times, but may also provoke large risk panics. The very feature that makes arbitrageurs liquidity providers in normal times, namely their...
