EARLY WARNING INDICATORS AND OPTIMAL POLICIES FOR MITIGATING ECONOMIC CRISES: EVIDENCE FROM META-ANALYSIS

Arlyana Abubakar (), G.A. Diah Utari () and Prayudhi Azwar ()
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Arlyana Abubakar: Bank Indonesia
G.A. Diah Utari: Bank Indonesia
Prayudhi Azwar: Bank Indonesia

Bulletin of Monetary Economics and Banking, 2020, vol. 23, issue 2, 269-294

Abstract: This study examines the early warning indicators of crises and the optimal policies for mitigating economic crises. Based on meta-analysis of 72 studies, we find that the exchange rate is the most used indicator in detecting crises, and the optimal policies for mitigating crises are monetary and fiscal policies. We further find that besides the exchange rate, the interest rate is a dominant indicator of crises in developed countries.Moreover, the foreign exchange, international reserves and current account are the dominant indicators in developing countries. The evidence for developing countries aligns with the finding that policies addressing external sector performance are preferable to mitigate crises in these countries.

Keywords: Economic crisis; Early warning indicators; Crisis management (search for similar items in EconPapers)
JEL-codes: C83 G01 H12 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:23:y:2020:i:2g:p:269-294

DOI: 10.21098/bemp.v23i1.1304

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