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Are the Central and Eastern European Transition Countries still vullnerable to an Financial Crisis? Results from the Signals Approach

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  • Brüggemann, Axel
  • Linne, Thomas

Abstract

The aim of the paper is to analyse the vulnerability of the Central and Eastern European accession countries to the EU as well as that of Turkey and Russia to a financial crisis. Our methodology is an extension of the signals approach. We develop a composite indicator to measure the evolution of the risk potential in each country. Our findings show that crises in Central and Eastern Europe are caused by much the usual suspects as in others emerging markets. In particular an overvalued exchange rate, weak exports and dwindling currency reserves have good predictive power for assessing crisis vulnerabilities.

Suggested Citation

  • Brüggemann, Axel & Linne, Thomas, 2002. "Are the Central and Eastern European Transition Countries still vullnerable to an Financial Crisis? Results from the Signals Approach," IWH Discussion Papers 157/2002, Halle Institute for Economic Research (IWH).
    • Handle: RePEc:zbw:iwhdps:iwh-157
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    Citations

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    Cited by:

    1. Tobias Knedlik & Gregor Von Schweinitz, 2012. "Macroeconomic Imbalances as Indicators for Debt Crises in Europe," Journal of Common Market Studies, Wiley Blackwell, vol. 50(5), pages 726-745, September.
    2. Dany-Knedlik, Geraldine & Kämpfe, Martina & Knedlik, Tobias, 2021. "The appropriateness of the macroeconomic imbalance procedure for Central and Eastern European Countries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 48(1), pages 123-139.
    3. Ivo Krznar, 2004. "Currency Crisis: Theory and Practice with Application to Croatia," Working Papers 12, The Croatian National Bank, Croatia.
    4. Kelbesa Megersa & Danny Cassimon, 2015. "Assessing Indicators of Currency Crisis in Ethiopia: Signals Approach," African Development Review, African Development Bank, vol. 27(3), pages 315-330, September.
    5. Komulainen, Tuomas, 2004. "Essays on financial crises in emerging markets," Scientific Monographs, Bank of Finland, number 2004_029.
    6. Mete Feridun, 2006. "Currency Crises in Emerging Markets: An Application of Signals Approach to Turkey," Discussion Paper Series 2006_26, Department of Economics, Loughborough University, revised Dec 2006.
    7. El-Shagi, M. & Knedlik, T. & von Schweinitz, G., 2013. "Predicting financial crises: The (statistical) significance of the signals approach," Journal of International Money and Finance, Elsevier, vol. 35(C), pages 76-103.
    8. Alvarez-Plata, Patricia & Schrooten, Mechthild, 2004. "Misleading indicators? The Argentinean currency crisis," Journal of Policy Modeling, Elsevier, vol. 26(5), pages 587-603, July.
    9. Tobias Knedlik & Rolf Scheufele, 2008. "Forecasting Currency Crises: Which Methods Signaled The South African Crisis Of June 2006?," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 367-383, September.
    10. María José Gil-Moltó & Joanna Poyago-Theotoky & Vasileios Zikos, 2006. "R&D policy and privatization in a mixed oligopoly," Discussion Paper Series 2006_25, Department of Economics, Loughborough University.
    11. Tai-Hock Kuek & Chin-Hong Puah & M. Affendy Arip, 2020. "Financial Vulnerability and Economic Dynamics in Malaysia," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 9(special i), pages 55-73.
    12. Yanping Zhao & Jakob Haan & Bert Scholtens & Haizhen Yang, 2014. "Leading Indicators of Currency Crises: Are They the Same in Different Exchange Rate Regimes?," Open Economies Review, Springer, vol. 25(5), pages 937-957, November.
    13. repec:zbw:bofism:2004_029 is not listed on IDEAS

    More about this item

    Keywords

    financial crises; vulnerability indicator; central and eastern Europe;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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