Resource title

Robust Lessons about Practical Early Warning Systems

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Resource description

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.

Resource author

Daniela Beckmann, Lukas Menkhoff, Katja Sawischlewski

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/22434

Resource license

Adapt according to the presented license agreement and reference the original author.