Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/22434 
Year of Publication: 
2005
Series/Report no.: 
Diskussionsbeitrag No. 322
Publisher: 
Universität Hannover, Wirtschaftswissenschaftliche Fakultät, Hannover
Abstract: 
Early warning systems (EWSs) are subject to restrictions that apply to exchange rates in general: fundamentals matter but their influence is small and unstable. Despite this limitation four major lessons emerge: First, EWSs have robust forecasting power and thus help policy-makers to prevent crises. Second, policy-makers must decide about some EWSs' elements, such as the sensitivity of the forecasts. Third, EWSs' performance is increased by taking a logit model, shorter samples and a regional approach. Fourth, the finding of contagion may motivate policy to shield its economy against inefficient international financial markets.
Subjects: 
early warning system
currency crises
emerging markets
JEL: 
F31
F37
F33
Document Type: 
Working Paper

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