2001 Rosenstein-Rodan Prize Winner Announced

The Institute for Economic Development awarded the 2001 Rosenstein-Rodan Prize to Yulia Rodionova and Jay Surti for their paper “The Onset of Speculative Currency Attacks”. The prize, in memory of Professor Paul Rosenstein-Rodan, is awarded annually to graduate students in economics submitting the best research paper in the field of development economics. The abstract for this paper follows:

“Speculative currency attacks provide an example of coordination problems wherein, conditional upon a successful attack, it is more profitable for a speculator to sell a little earlier than at the last moment. In this paper, we analyze the impact of introducing such strategic substitutability into an otherwise standard dynamic coordination game. Enriching the payoff structure in this manner yields the following results: increasing the ratio of speculative capital to central bank’s foreign exchange reserves induces more aggressive selling strategies, thereby reducing the delay preceding a devaluation; allowing speculators to react sufficiently quickly to the actions of others yields a unique equilibrium where the coordination problem is successfully resolved resulting in an immediate devaluation. Aggregate uncertainty concerning speculative capital considerably increases the probability of a delay in the onset of an attack, and also, of coordination failure.”