Early Warning Systems for Currency Crises in Emerging Markets: Leading Indicators vs. Probit Estimation
95 Pages Posted: 2 Dec 2013
Date Written: April 2, 2002
This paper aims at identifying key empirical regularities characterizing the onset of a currency crisis that might be suitable for early warning purposes and proceeds by providing analysis and empirical tests of economic and financial variables both in-sample and out-of-sample in order to assess their performance as leading indicators of a speculative attack. Two distinct methodologies are compared and implications for the theory of currency crises and economic policies to their prevention will be investigated in the process.
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