Hernández de Cos, Pablo Koester, Gerrit B. Moral-Benito, Enrique Nickel, Christiane
Year of Publication:
ECB Working Paper 1712
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.
debt management deficit surplus fiscal policy general outlook and conditions international lending and debt problems sovereign debt studies of particular policy episodes