A GPS navigator to monitor risks in emerging economies: the vulnerability dashboard

Irma Alonso Alvarez and Luis Molina Sánchez

No 2111, Occasional Papers from Banco de España

Abstract: This paper presents a simple, transparent and model-free framework for monitoring the build-up of vulnerabilities in emerging economies that may affect financial stability in Spain through financial, foreign direct investment or trade linkages, or via global turbulences. The vulnerability dashboards proposed are based on risk percentiles for a set of 34 key indicators according to their historical and cross-section frequency distributions. The framework covers financial market variables, macroeconomic fundamentals –which are grouped into real, fiscal, banking and external variables– and institutional quality and political indicators. This methodology is a valuable complement to other existing tools such as the Basel credit-to-GDP gap and vulnerability indices.

Keywords: emerging economies; crisis; vulnerabilities; heat maps; risks (search for similar items in EconPapers)
JEL-codes: F01 F34 G01 G32 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2021-04
New Economics Papers: this item is included in nep-fdg and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:opaper:2111

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