Name: Julian Inchauspe* Course: PhD;ECON Department: Department of Economics Staff Supervisors: Principal Supervisor - Associate Professor Tony Bryant Associate Supervisors: Associate Professor Ronald Ripple, Dr Roselyne Joyeux Email Address: jinchaus@efs.mq.edu.au Thesis Title The microeconomic foundations of currency crises

Abstract

During the last three decades, an unprecedented number of currency crises have occurred around the globe. These crises embody complex market failures and economic phenomena. Basic models include “grey zone” states of fundamentals in which a crisis can be self-fulfilling, i.e. it may occur but not necessarily. When it comes to the formalization of these models, there are some technical difficulties which have limited their theoretical development. In particular, the market failures or “black box” leading to multiple equilibria are complex and require the use of different economic and mathematical tools. My research focuses on these aspects and on trying to develop a theoretical framework to analyse these phenomena.

The research can be divided into the following aspects:

1. Existence of Pareto-efficient solutions: if currency crises lead to Pareto-inferior situations, one possibility is that markets cannot provide a non-crisis equilibrium.

2. Multiple equilibria. If multiple equilibria exist, it is possible that less Pareto-efficient equilibria dominate the non-crisis equilibrium.

3. Role of interest rate in coordination and/or information failures.

4. Dynamic modelling. Use of attractors, bifurcators, equilibrium stability and selection.

5. Empirical Testing: using Markov-switching regime econometric models.

*Julian Inchauspe is a 28 year-old Argentine economist. His studies include a [first] five-year Licenciado en Economía degree from UADE (Argentina), and a MSc in International Business Economics, from the University of Wales (UK). He has experience working as an economic advisor in the Federal Government in Argentina and as a consultant in other organizations.