IDEAS home Printed from https://ideas.repec.org/a/taf/glecrv/v39y2010i1p99-113.html
   My bibliography  Save this article

Predicting the Global Crisis Recovery Period: Lessons from the 1997 Crisis

Author

Listed:
  • Jarita Duasa
  • Nursilah Ahmad

Abstract

The objective of this paper is to identify the best indicator in forecasting the recovery period from the current global crisis for Malaysia. Initially, to determine the best indicator for the recovery period, we construct a simple forecasting model that incorporates three indicators: lagging, leading and coincidence indices, with two proxies of economic performance, macroeconomic and financial variables. We estimate a two-variable vector error correction model (VECM) using monthly and quarterly data covering the period 1980 to 2000. We alternate between the three indicators and we evaluate each model using out-of-sample forecast. Using the results of the initial process of analysis, we predict the recovery period of Malaysian economy from the current global economic crisis. It is found that lagging index is the best indicator of financial performance of the economy. From the half-life calculation base on error correction term, the study found that Malaysia was able to recover from the previous 1997 crisis within a two to four year period after the crisis. Given that the current crisis environment is similar to the previous 1997 crisis, a similar time period could apply to the current global crisis recovery.

Suggested Citation

  • Jarita Duasa & Nursilah Ahmad, 2010. "Predicting the Global Crisis Recovery Period: Lessons from the 1997 Crisis," Global Economic Review, Taylor & Francis Journals, vol. 39(1), pages 99-113.
  • Handle: RePEc:taf:glecrv:v:39:y:2010:i:1:p:99-113
    DOI: 10.1080/12265081003696437
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/12265081003696437
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Indicator; forecasting; crisis; recovery; Malaysia;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:glecrv:v:39:y:2010:i:1:p:99-113. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/RGER20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.