Robust Lessons about Practical Early Warning Systems

Daniela Beckmann, Lukas Menkhoff () and Katja Sawischlewski

Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover from Universität Hannover, Wirtschaftswissenschaftliche Fakultät

Abstract: Early warning systems (EWSs) are subject to restrictions that apply to exchange rates in general: fundamentals matter but their influence is small and unstable. Despite this limitation four major lessons emerge: First, EWSs have robust forecasting power and thus help policy-makers to prevent crises. Second, policy-makers must decide about some EWSs elements, such as the sensitivity of the forecasts. Third, EWSs performance is increased by taking a logit model, shorter samples and a regional approach. Fourth, the finding of contagion may motivate policy to shield its economy against inefficient international financial markets.

Keywords: early warning system; currency crises; emerging markets (search for similar items in EconPapers)
JEL-codes: F33 F37 F31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fmk, nep-for and nep-ifn
Date: 2005-10
View list of references

Downloads: (external link)
http://www.wiwi.uni-hannover.de/Forschung/Diskussionspapiere/dp-322.pdf (application/pdf)

Related works:
Working Paper: Robust Lessons about Practical Early Warning Systems (2005)
Journal Article: Robust lessons about practical early warning systems (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:han:dpaper:dp-322

Access Statistics for this paper

More papers in Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover from Universität Hannover, Wirtschaftswissenschaftliche Fakultät
Contact information at EDIRC.
Series data maintained by Dietrich, Karl ().