A Leading Indicators Approach to the Predictability of Currency Crises: The Case of Turkey
Hazine Dergisi, Sayi Working Paper No. 1998/12
31 Pages Posted: 13 Sep 2001
Date Written: June 1999
In this paper, we present a leading economic indicators approach to the predictability of currency crises in Turkey. After summarizing main theoretical models of currency crises and discussing the possible origins of financial crises in the European ERM countries (1992-93), Turkey (1994) and Southeast Asian countries (1997-98), we survey the empirical literature on the predictability of currency crises. Our leading economic indicators approach based on Burns and Mitchell (1946) shows that terms-of-trade, market-determined exchange rate over official exchange rate and some specific survey data can be considered as major leading economic indicators of currency crises in Turkey.
Keywords: Currency crises, leading economic indicators, Turkey
JEL Classification: F31, F47, G15
Suggested Citation: Suggested Citation