Macroeconomic Imbalances as Indicators for Debt Crises in Europe

20 Pages Posted: 23 Aug 2012

See all articles by Tobias Knedlik

Tobias Knedlik

Fulda University of Applied Sciences; Halle Institute for Economic Research (IWH)

Gregor von Schweinitz

Halle Institute for Economic Research

Date Written: September 2012

Abstract

European authorities and scholars published proposals on which indicators of macroeconomic imbalances might be used to uncover risks for the sustainability of public debt in the European Union. In this article the ability of four proposed sets of indicators to send early warnings of debt crises is tested using a signals approach for the study of indicators and the construction of composite indicators. It is found that a broad composite indicator has the highest predictive power. This fact still holds true if equal weights are used for the construction of the composite indicator in order to reflect the uncertainty about the origin of future crises.

Suggested Citation

Knedlik, Tobias and von Schweinitz, Gregor, Macroeconomic Imbalances as Indicators for Debt Crises in Europe (September 2012). JCMS: Journal of Common Market Studies, Vol. 50, Issue 5, pp. 726-745, 2012, Available at SSRN: https://ssrn.com/abstract=2134723 or http://dx.doi.org/10.1111/j.1468-5965.2012.02264.x

Tobias Knedlik (Contact Author)

Fulda University of Applied Sciences ( email )

Leipziger Stra├če 123
Fulda, 36037
Germany

Halle Institute for Economic Research (IWH) ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Gregor Von Schweinitz

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1
Abstract Views
569
PlumX Metrics