Financial risk early warning systems are essential for proactive risk management in volatile markets, particularly for emerging economies such as China. This study develops a hybrid deep learning model integrating Convolutional Neural Networks (CNNs), Long Short-Term Memory (LSTM), and Gated...

Utilizing logit econometric models, this paper investigates the primary factors contributing to the onset of banking, inflation, and foreign exchange reserves crises in Bolivia. The analysis reveals that banking crises are more likely when the terms of trade improve, with greater monetary...

This paper examines the role of currency crash risk in explaining the persistent profitability of carry trades. Focusing on the US Dollar-Turkish Lira market, we construct three forwardlooking measures of crash risk: risk reversals, crash probabilities from option-implied distributions, and jump...

This paper explores the central role of monetary governance, i.e., high politics and low politics, in protecting a currency's exchange rate and reducing its volatility during periods of global crisis. Using annual panel data from 15 developed and emerging economies between 2001 and 2023, and...

This study investigates the relationship between national economic crises and Environmental, Social, and Governance (ESG) performance across 100 countries from 1990 to 2019. While ESG frameworks have gained prominence in assessing sustainability, limited attention has been given to the role of...

This paper analyzes the unanalized topic in macroeconomic (monetary) politics, which is the emergence of the currency crisis as a consequence of targeting inflation. Many central banks adopted inflation targeting under a pressure from the IMF. Sudden depreciation of exchange rate which results...

We introduce a novel dataset of large depreciations worldwide since 1971. First, we use a multi-step approach to accurately pinpoint large depreciation events on monthly data. We then construct large depreciation episodes that cover 24 months after the initial depreciation event. The month-level...

This study examines how the effectiveness of capital control regulations and political performance shape the likelihood of currency crises in high- and middle-income economies. Using panel data for 48 countries from 1996 to 2023 and estimating probit, logit, and IV-probit models, the analysis...

In recent years, currency volatility among Southeast and East Asian economies has fueled concerns about the possible occurrence of another financial crisis in the Asia and the Pacific region. The Asian financial crisis in 1997 and the global financial crisis of 2008 revealed some serious...

This paper challenges the prevailing view in the sovereign debt literature by arguing that sovereign debt markets, in many respects, behave similarly to other credit markets. These markets are hierarchical rather than flat, inherently hybrid in nature, blending elements of public order and...

The paper explores the interconnections between foreign capital flows and the exchange rate regime switching in developing countries. We formulate the exchange rate regime switching as annual time series of binary/ordered variables employing de facto classification of exchange rate arrangements...

We analyse how reversals of several types of capital flows impact currency crises in emerging market and developing economies. Estimates of logit models show that reversals of (equity and debt) portfolio flows significantly increase the likelihood of currency crises in emerging market economies....

Foreign exchange reserves (FER), especially dollar assets, are vital for a developing country to maintain economic stability, foster growth, and protect against unexpected amendments. In recent years, particularly since the onset of COVID-19, several emerging countries have experienced...

The CFA franc devaluation on 11 January 1994 stands out as the most significant reform within the Franc Zone system since political independences of former African French colonies in 1960, yet a topic shrouded into profound taboo. So far, the economic literature has failed to draw any connection...

We analyze the repercussions of different kinds of uncertainty on cash demand, including uncertainty of cashless infrastructures, confidence crises of the financial system, natural disasters, political uncertainties, and inflationary crises. Based on a comprehensive literature survey and...

This paper introduces an endogenous network of payment chains into a business cycle model. Motivated by evidence of linked payments across firms in Costa Rica, we develop a framework where production orders form bilateral relations: some payments are executed immediately, while others---chained...

This study aimed to examine real effective exchange rate (REER) misalignment in Iran and its relation to the currency crisis. The behavioral equilibrium exchange rate was employed to calculate the equilibrium exchange rate (EER), and misalignment was obtained using the exchange rate deviation...

We study a model in which policy aims at aggregate price stability. A fiscal imbalance materializes that, if uncorrected, must cause inflation, but the imbalance may get corrected in the future with some probability. By maintaining price stability in the near term, monetary policy can buy time...

How do capital flows affect the synchronization of two countries’ financial cycles? We obtain data onbilateral capital flows and domestic financial cycles to introduce a ”Finance Co-movement Slope” thatdescribes this relationship. We find that this slope is positive and increasing in the...