Methodology for an Early Warning System: The Signals Approach

Carmen Reinhart, Morris Goldstein and Graciela Kaminsky ()

MPRA Paper from University Library of Munich, Germany

Abstract: In this chapter we provide a brief review of the “signals” approach used in this book to assess the probability of a currency or a banking crisis. This methodology was first used to analyze the performance of a variety of macroeconomic and financial indicators around the “twin crises” in Kaminsky and Reinhart (1996) and is described in greater detail in Kaminsky, Lizondo, and Reinhart (1998). In the analysis that follows we focus on a sample of 25 countries over the period 1970 to 1995. The out-of-sample performance of the “signals” approach will be assessed using data for the January 1996-June 1997 period.

Keywords: early warning system; crises; banking; currency; financial indicators (search for similar items in EconPapers)
JEL-codes: F3 F31 F32 F36 F37 F4 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (2)

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Related works:
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Working Paper: The Wake of Crises and Devaluations (2000)
Working Paper: Early Warning System: Empirical Results from The Signals Approach (2000)
Working Paper: Rating the Rating Agencies (2000)
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