Early warning indicators of economic crises : evidence from a panel of 40 developed countries

Abstract

Using a panel of 40 EU and OECD countries for the period 1970-2010 we construct an early warning system. The system consists of a discrete and a continuous model.

In the discrete model, we collect an extensive database of various types of economic crises called CDEC 40-40 and examine potential leading indicators.

Keywords

• Bayesian model averaging
• dynamic panel
• early warning indicators