Measuring potential vulnerabilities in emerging market economies

John Hawkins, Mark Klau

Research output: Working paper

Abstract

This paper describes some experiments with the construction of relatively simple indices which summarise in a systematic and objective way information about emerging economies currently under pressure in financial markets and those vulnerable to such pressure in the future. A survey of the literature suggests financial crises are typically preceded by overvalued exchange rates, inadequate
international reserves, recessions and excessive credit growth. These indicators and others, such as short-term external debt, which appear more important in recent crises are included in the summary indices of vulnerability. The vulnerability indices are shown to have modest predictive power for the pressure index but are far from conclusive in themselves.
Original languageEnglish
Place of PublicationBasel, Switzerland
PublisherBank for International Settlements
Pages1-46
Number of pages46
Publication statusPublished - 2000

Publication series

NameBIS Working Papers
PublisherBank for International Settlements
ISSN (Print)1020-0959

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Hawkins, J., & Klau, M. (2000). Measuring potential vulnerabilities in emerging market economies. (pp. 1-46). (BIS Working Papers). Basel, Switzerland: Bank for International Settlements.