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Early Warning Indicators And Optimal Policies For Mitigating Economic Crises: Evidence From Meta-Analysis

Author

Listed:
  • Arlyana Abubakar

    (Bank Indonesia)

  • G.A. Diah Utari

    (Bank Indonesia)

  • Prayudhi Azwar

    (Bank Indonesia)

Abstract

This study examines the early warning indicators of crises and the optimal policies for mitigating economic crises. Based on meta-analysis of 72 studies, we find that the exchange rate is the most used indicator in detecting crises, and the optimal policies for mitigating crises are monetary and fiscal policies. We further find that besides the exchange rate, the interest rate is a dominant indicator of crises in developed countries.Moreover, the foreign exchange, international reserves and current account are the dominant indicators in developing countries. The evidence for developing countries aligns with the finding that policies addressing external sector performance are preferable to mitigate crises in these countries.

Suggested Citation

  • Arlyana Abubakar & G.A. Diah Utari & Prayudhi Azwar, 2020. "Early Warning Indicators And Optimal Policies For Mitigating Economic Crises: Evidence From Meta-Analysis," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 23(2), pages 269-294, July.
    • Handle: RePEc:idn:journl:v:23:y:2020:i:2g:p:269-294
    DOI: https://doi.org/10.21098/bemp.v23i1.1304
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    Cited by:

    1. Solikin M. Juhro & Prayudhi Azwar, 2021. "Fx Intervention Strategy And Exchange Rate Stability In Indonesia," Working Papers WP/03/2021, Bank Indonesia.

    More about this item

    Keywords

    Economic crisis; Early warning indicators; Crisis management;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • G01 - Financial Economics - - General - - - Financial Crises
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

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