Go to AfricaBib home

Go to AfricaBib home Africana Periodical Literature Go to database home

bibliographic database
Line
Previous page New search

The free AfricaBib App for Android is available here

Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Assessing indicators of currency crisis in Ethiopia: signals approach
Authors:Megersa, Kelbesa
Cassimon, DannyISNI
Year:2015
Periodical:African Development Review (ISSN 1467-8268)
Volume:27
Issue:3
Pages:315-330
Language:English
Geographic term:Ethiopia
Subjects:money
foreign exchange
financial conditions
economic models
External link:https://doi.org/10.1111/1467-8268.12148
Abstract:Currency crises, generally defined as rapid depreciations of a local currency or loss of foreign exchange reserves, are common incidents in modern monetary systems. Due to their repeated occurrence and severity, they have earned wide coverage by both theoretical and empirical literature. However, unlike advanced and emerging economies, currency crises in low-income countries have not received due attention. This paper uses the signals approach developed by Kaminsky et al. (Kaminsky, G., S. Lizondo and C. Reinhart (1998), 'Leading Indicators of Currency Crises', International Monetary Fund Staff Papers, Vol. 45, pp. 1-48.) and assesses currency crisis in Ethiopia over the time frame January 1970 to December 2008. Using the Exchange Market Pressure Index (EMPI), the authors identify three currency crisis episodes that coincide with the liberalization following the fall of Ethiopian socialism, the Ethio-Eritrean border conflict, and the zenith of the global financial crisis. The timing shows the importance of both local and international dynamics. More macroeconomic indicators picked up the first crisis in a 24-month signalling window, compared to the latter two. Three categories of indicators were used: current account, capital account and domestic financial sector. None of the capital account indicators were significant based on the noise-to-signal ratio rule. One possible explanation for this might be the weak integration of the Ethiopian economy with global capital markets. Bibliogr., notes, ref., sum. [Journal abstract]
Cover