Could Early Warning Systems Have Helped To Predict the Sub-Prime Crisis?
AbstractOne of the features of the sub-prime crisis, that began in August 2007, was its unexpected nature. It came as a surprise not only to most financial market participants but also in some degree to the policy community. In this context, we seek to assess whether early warning systems based on the logit and binomial tree approaches on the UK and US economies could have helped to warn about the crisis. We also consider a `check list approach' of indicators based on history. Although not all of the complementary approaches are successful, we contend that our work suggests that a broadening of approaches to macroprudential analysis is appropriate.
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Bibliographic InfoArticle provided by National Institute of Economic and Social Research in its journal National Institute Economic Review.
Volume (Year): 206 (2008)
Issue (Month): 1 (October)
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Sub-prime crisis; early warning; financial instability; macroprudential analysis; JEL Classifications: E44; E58;
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- JEL - Labor and Demographic Economics - - - - -
- Cla - Mathematical and Quantitative Methods - - - - -
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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