TY - BOOK ID - 135219253 TI - Leading Indicators of Currency Crises AU - Kaminsky, Graciela Laura AU - Reinhart, Carmen M. AU - Reinhart, Saul PY - 1999 PB - Washington, D.C. : World Bank, DB - UniCat KW - Devaluation of currency. UR - https://www.unicat.be/uniCat?func=search&query=sysid:135219253 AB - November 1997 Signals from some variables are better than others in predicting a currency crisis. The variables with the best track record include exports, output, equity prices, deviations of the real exchange rate frosm trend, and the ratio of broad money to gross international reserves. The authors examine the empirical evidence on currency crises and propose a specific early-warning system. This system involves monitoring the evolution of several indicators that tend to exhibit unusual behavior in the periods preceding a crisis. An indicator exceeding a certain threshold value should be interpreted as a warning signal that a currency crisis may take place within the following 24 months. The threshold values are calculated to strike a balance between the risk of having many false signals and the risk of missing many crises. Within this approach, the variables with the best track record include exports, deviations of the real exchange rate from trend, the ratio of broad money to gross international reserves, output, and equity prices. The evidence does not support some of the other indicators that were considered, including imports, bank deposits, the difference between foreign and domestic real deposit interest rates, and the ratio of lending to deposit interest rates. This paper is in part a product of the Office of the Chief Economist, Latin America and the Caribbean Region. ER -