Anticipating Balance of Payments Crises--The Role of Early Warning Systems

By Catherine A Pattillo, Andrew Berg, Gian M Milesi-Ferretti, Eduardo Borensztein

January 24, 2000

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Catherine A Pattillo, Andrew Berg, Gian M Milesi-Ferretti, and Eduardo Borensztein. Anticipating Balance of Payments Crises--The Role of Early Warning Systems, (USA: International Monetary Fund, 2000) accessed November 22, 2024

Summary

Recent years have witnessed an increase in the frequency of currency and balance of payments crises in developing countries. More important, the crises have become more virulent, have caused widespread disruption to other developing countries, and have even had repercussions on advanced economies. To predict crises, their causes must be clearly understood. Two competing strands of theories are reviewed in this paper. The first focuses on the consequences of such policies as excessive credit growth in provoking depletion of foreign exchange reserves and making a devaluation enevitable. The second emphasizes the trade-offs between internal and external balance that the policymaker faces in defending a peg.

Subject: Financial crises, Foreign exchange, Money

Keywords: Africa, Approaching crisis, Balance of payments crisis, Crisis, Currencies, Currency crises, Early warning system framework, Early warning systems, Economy, Global, OP, Probability of crisis, Real exchange rates, Section IV, Timing of crisis

Publication Details

Pages:

39
Volume:

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DOI:

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Issue:

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Series:

Occasional Paper No. 2000/004
Stock No:

S186EA0000000
ISBN:

9781557758286
ISSN:

0251-6365

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