This paper compares in-sample and out-of-sample performances of parametric and non-parametric early warning systems (EWS) for currency crises in emerging economies. The parametric EWS achieves superior out-of-sample results compared with the non-parametric EWS. The policymaker faces a trade-off...

We estimate sovereign bond spreads of 28 emerging economies over the period January 1998–December 2011 and test the ability of the model in generating accurate in-sample predictions for bond spreads. The impact and significance of explanatory variables on spreads vary across regions and...

We identify episodes of sudden stops in emerging economies and estimate the probability to observe them. Sudden stops are more likely when global growth falters, risk aversion in financial markets rises, and vulnerabilities in the external and financial sectors increase. However, the...