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Some Policy Issues Regarding an Early Warning System

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  • Reinhart, Carmen
  • Goldstein, Morris
  • Kaminsky, Graciela

Abstract

In focusing on the 24 month window prior to the onset of the crisis, the criteria for ranking the indicators presented in our related work does not distinguish between a signal given 12 months prior to the crisis and one given one month prior to the crisis. In what follows we examine this issue, by tabulating for each of the monthly indicators the average number of months in advance of the crisis when the first signal occurs; this, of course, does not preclude the fact that the indicator may continue to give signals through the entire period immediately preceding the crisis. Indeed, for the more reliable indicators signals tend to become increasingly persistent ahead of crises.

Suggested Citation

  • Reinhart, Carmen & Goldstein, Morris & Kaminsky, Graciela, 2000. "Some Policy Issues Regarding an Early Warning System," MPRA Paper 24580, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:24580
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    Cited by:

    1. Juan Amador & José Gómez-González & Andrés Pabón, 2013. "Loan growth and bank risk: new evidence," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 27(4), pages 365-379, December.
    2. Thomas D. Willett & Ekniti Nitithanprapas & Isriya Nitithanprapas & Sunil Rongala, 2004. "The Asian Crises Reexamined," Asian Economic Papers, MIT Press, vol. 3(3), pages 32-87.
    3. Olfa Kaabia & Ilyes Abid, 2012. "Theoretical Channels of International,Transmission During the Subprime Crisis to OCDE Countries : A FAVAR Model Under Bayesian Framework," EconomiX Working Papers 2012-40, University of Paris Nanterre, EconomiX.
    4. Philippe Ferreira, 2012. "Déficits extérieurs et déclin de l'épargne intérieure sont des obstacles au financement du développement de l'Inde," Revue d'économie financière, Association d'économie financière, vol. 0(3), pages 115-136.
    5. Nerea San-Martín-Albizuri & Arturo Rodriguez-Castellanos, 2018. "Crises and unpredictability in developing countries," Third World Quarterly, Taylor & Francis Journals, vol. 39(1), pages 35-50, January.
    6. Victor Yotzov, 2014. "Prognostic Power of Early Warning Signals for Financial Crises – Theoretical Approaches and Empirical Results," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 3-38.
    7. Filippopoulou, Chryssanthi & Galariotis, Emilios & Spyrou, Spyros, 2020. "An early warning system for predicting systemic banking crises in the Eurozone: A logit regression approach," Journal of Economic Behavior & Organization, Elsevier, vol. 172(C), pages 344-363.

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    More about this item

    Keywords

    crisis; leading indicator; banking; exchange rate; forecasting;
    All these keywords.

    JEL classification:

    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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