Abstract
This paper proves that Krugman’s currency crisis model belongs to the medieval time, when commodity money prevailed. This paper also reveals many mistakes of his model. Instead, this paper reconsiders the crisis model offered by Choi (2014). Currency crisis arises from the denial of stealing by government and its refusal to depreciate the local currency. Then, the arbitrage by the people, including government bureaucrats, leads to the outflow and dry-up of foreign reserves.
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