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The pros and cons of higher transparency: the case of speculative attacks*

Published online by Cambridge University Press:  17 August 2016

Jean-Pierre Allegret  and
Camille Cornand
Jean-Pierre Allegret
Affiliation:
GATE, UMR 5824 CNRS, Université Lyon 2 et ENS LSHÉcole Normale Supérieure Lettres et Sciences Humaines
Camille Cornand
Affiliation:
Financial Market Group, London School of Economics
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Summary

The aim of this paper is to evaluate to what extent more transparency can reduce the occurrence of speculative attacks. It proposes a survey of the literature about the pros and cons of transparency on the exchange rate market, which is one of the main pillars of the new international financial architecture. The effects of transparency are shown to be ambiguous both from a theoretical and empirical point of views. However, the imperfect connection resulting from the confrontation between theory and empirics suggests that some new insights are necessary in order to better catch stylised facts on the one hand and to better evaluate the theory on the other, as has been done in recent literature. This leads to new proposals for economic and informational policies.

Résumé

Résumé

Cet article analyse dans quelle mesure une transparence informationnelle plus élevée réduit la probabilité d'attaque spéculative. La transparence est devenue l'un des piliers de la nouvelle architecture du système financier international proposée par les institutions internationales après les crises de change des années 1990. L'article propose une recension de la littérature permettant d'identifier les arguments favorables et défavorables à une transparence accrue. On montre que les effets d'une plus grande transparence sont ambigus, et ce, à la fois d'un point de vue théorique et empirique. Cependant, l'imparfaite concordance entre les conclusions théoriques et les résultats empiriques nous conduit à proposer de nouveaux cadres informationnels, tels qu'ils découlent de la littérature la plus récente, afin, d'une part, de mieux rendre compte des faits stylisés et, d'autre part, de mieux évaluer les théories sous-jacentes.

Keywords

transparenceinformation publique et privéeattaques spéculativesjeux de coordinationconnaissance communeC73D82F31transparencypublic and private informationspeculative attackcoordination gamescommon knowledgeD70D81D83
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 72 , Issue 3 , 2006 , pp. 215 - 246
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2006 

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Footnotes

**

GATE - CNRS Bureau R131 15, Parvis René Descartes BP 7000 69342 Lyon cedex 07 FRANCE.

***

R 410 London School of Economics and Political Sciences Houghton Street, London WC2A 2AE, UNITED-KINGDOM.

*

We thank the participants to the 2004 International Conference on Coordination Failures in Paris and more especially Frank Heinemann as well as an anonymous referee and the editor of Louvain Economic Review Michel De Vroey for very useful comments. All errors remain our own responsibility.

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