Indicators of Financial Instability

Mehdi Monadjemi () and John Lodewijks ()
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Mehdi Monadjemi : School of Economics, University of New South Wales
John Lodewijks : School of Economics, University of New South Wales

Journal of Money and Economy, 2009, vol. 5, issue 2, 33-46

Abstract: A global Slowdown, rising oil prices, and monetary tightening in industrial countries may lead to net capital outflows which accentuate high ratios of short-term to total external debt. This paper focuses on finding consistent indicators of financial instability. Knowledge of these indicators should assist attempts to implement institutional financial reform and improve an economy's resilience to shocks. It is highly useful to provide policy-makers with tools that measure financial crises, and in particular, to examine how macroeconomic aggregates behave during episodes of financial instability cycles. This is the objective of what follows and these indicators signal the variables that need to be monitored for effective policy responses to emerging financial difficulties.

Keywords: Financial Instability; Financial Crises (search for similar items in EconPapers)
JEL-codes: G1 (search for similar items in EconPapers)
Date: 2009
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