EARLY WARNING SYSTEMS FOR SYSTEMIC CRISES

This paper proposes a early warning system for systemic crises built on data for a large number of systemic crisis, manifested before and after 2007. The conclusion of our analyzes is that the current crisis, in which the contagion effect had an important role, complicated the process of developing early warning systems for systemic crisis, since the relationship between the probability of their manifestation and macroeconomic fundamentals has become less obvious. Thus, variables whose evolution could, in the past, indicate the probability of manifestation of a crisis, today is proved their futility in this process. On the other hand, the evolution of variables such as credit growth, inflation rate and the ratio between monetary aggregate M2 and international reserves may issue warnings regarding the manifestation of systemic crises Thus, these variables represent common predictors for crises in the past and the present crisis.