Signalling Fiscal Stress in the Euro Area -- A Country-Specific Early Warning System

26 Pages Posted: 12 Aug 2014

See all articles by Pablo Hernández de Cos

Pablo Hernández de Cos

Banco de España

Gerrit Koester

European Central Bank (ECB)

Enrique Moral-Benito

Banco de España; Universidad Carlos III de Madrid

Christiane Nickel

European Central Bank (ECB)

Multiple version iconThere are 2 versions of this paper

Date Written: July 31, 2014

Abstract

The sovereign debt crisis in the euro area has increased the interest in early warning indicators, with the aim to indicate the build up of fiscal stress early on and to facilitate crisis prevention by a timely counteraction of fiscal and macroeconomic policies. This paper presents possible improvements to enhance existing early warning indicators for fiscal stress, especially for the euro area. We show that a country specific approach could strongly increase the signalling power of early warning systems. Finally we draw policy conclusions for the setting up and application of a system of early warning indicators for fiscal stress.

Keywords: fiscal policy, studies of particular policy episodes, general outlook and conditions, deficit surplus, debt management, sovereign debt, international lending and debt problems

JEL Classification: E62, E65, E66, H62, H63, F34

Suggested Citation

Hernández de Cos, Pablo and Koester, Gerrit B. and Moral-Benito, Enrique and Nickel, Christiane, Signalling Fiscal Stress in the Euro Area -- A Country-Specific Early Warning System (July 31, 2014). ECB Working Paper No. 1712. Available at SSRN: https://ssrn.com/abstract=2474678

Pablo Hernández de Cos (Contact Author)

Banco de España ( email )

Madrid, 28014
Spain

Gerrit B. Koester

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Enrique Moral-Benito

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Universidad Carlos III de Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain

Christiane Nickel

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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