Assessing Vulnerabilities in Emerging-Market Economies

Tatjana Dahlhaus and Alexander Lam

Discussion Papers from Bank of Canada

Abstract: This paper introduces a new tool to monitor economic and financial vulnerabilities in emergingmarket economies. We obtain vulnerability indexes for several early warning indicators covering 26 emerging markets from 1990 to 2017 and use them to monitor the evolution of vulnerabilities before, during and after an economic or financial crisis. We find that different historical episodes of crises reflect different vulnerabilities in terms of their composition, buildup and responses. Nevertheless, most currency crises are generally preceded by a buildup of imbalances in the external sector followed by an increase in sovereign debt imbalances. Finally, we assess current EME vulnerabilities in our country sample and visualize them using a heat map.

Keywords: International topics; Monetary and financial indicators; Recent economic and financial developments (search for similar items in EconPapers)
JEL-codes: E E4 E41 E42 E5 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2018
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocadp:18-13

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