The European Commission’s Scoreboard of Macroeconomic Imbalances – The Impact of Preferences on an Early Warning System
AbstractThe European Commission’s Scoreboard of Macroeconomic Imbalances is a rare case of a publicly released early warning system (EWS). That allows for analyzing the preferences of the involved politicians with regard to the two potential errors of an EWS – missing a crisis and issuing a false alarm. This is done for the first time for EWS in general by using a standard signals approach including a preference-based optimization approach to set thresholds. It is shown that in general, the thresholds of the scoreboard are set low (resulting in more alarm signals) as compared to a neutral stand.
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Bibliographic InfoPaper provided by Halle Institute for Economic Research in its series IWH Discussion Papers with number 10.
Date of creation: Nov 2012
Date of revision:
early warning system; scoreboard; preferences; incentives; political economy;
Find related papers by JEL classification:
- G01 - Financial Economics - - General - - - Financial Crises
- F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
- F53 - International Economics - - International Relations and International Political Economy - - - International Agreements and Observance; International Organizations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-06 (All new papers)
- NEP-EEC-2012-12-06 (European Economics)
- NEP-POL-2012-12-06 (Positive Political Economics)
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