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Figure 1
Fundamentals and currency collapse: a comparison across models
with and without common knowledge
A continuum of investors with common knowledge of the
fundamental
fundamental
0
Attack
Collapse
1
Multiple equilibria:
(attack and collapse)
(no attack, no collapse)
No Attack
No Collapse
Benchmark model I
A continuum of investors with incomplete information
fundamental
1-t
Large attack and
collapse
No collapse
Some investors attack