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Speculation

Speculation

Stabilising
speculation
(a) Initial price fall
Stabilising speculation: initial price fall
P

S1

P1 a

D1

O Q
Stabilising speculation: initial price fall
P

S1

P1 a

D1
P2 b
D2
O Q
Stabilising speculation: initial price fall
P
S2
S1

P1 a
P3 c

D1
P2 b
D2 D3

O Q
Speculation

Stabilising
speculation
(b) Initial price rise
Stabilising speculation: initial price rise
P
S1

P1 a

D1
O Q
Stabilising speculation: initial price rise
P
S1

P2 b

P1 a
D2

D1
O Q
Stabilising speculation: initial price rise
P
S1
S2

P2 b

P3 c

P1 a
D2

D3
D1
O Q
Speculation

Destabilising
speculation
(a) Initial price fall
Destabilising speculation: initial price fall
P
S1

P1 a

D1

O Q
Destabilising speculation: initial price fall
P
S1

P1 a
P2 b

D1
D2

O Q
Destabilising speculation: initial price fall
P
S1
S2

P1 a
P2 b

P3 c

D1
D2
D3

O Q
Speculation

Destabilising
speculation
(b) Initial price rise
Destabilising speculation: initial price rise
P

S1

P1 a

D1

O Q
Destabilising speculation: initial price rise
P

S1

P2 b
P1 a

D2
D1

O Q
Destabilising speculation: initial price rise
P
S2
S1

P3 c

P2 b
P1 a

D3
D2
D1

O Q
Speculation

Exchange rate
speculation:
Stabilising speculation
(Initial depreciation)
Stabilising speculation
S1 S3
S2

er1
Exchange rate

er3

er2

D1
D2 D3
O
Quantity of £s
Speculation

Exchange rate
speculation:
Destabilising speculation
(Initial depreciation)
Destabilising speculation
S1 S2
S3

er1
Exchange rate

er2

er3

D1
D3 D2
O
Quantity of £s

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