Hostname: page-component-586b7cd67f-dsjbd Total loading time: 0 Render date: 2024-11-27T22:22:44.974Z Has data issue: false hasContentIssue false
  • English
  • Français

Analysing the Relevance of the MIP Scoreboard's Indicators

Published online by Cambridge University Press:  01 February 2017

Domonkos Tomáš ,
Ostrihoň Filip ,
Šikulová Ivana  and
Širaňová Mária
Domonkos Tomáš*
Affiliation:
IER SAS and FSES CU in Bratislava
Ostrihoň Filip*
Affiliation:
IER SAS
Šikulová Ivana*
Affiliation:
IER SAS
Širaňová Mária*
Affiliation:
IER SAS and FNE EU in Bratislava
*
e-mail: [email protected]
e-mail: [email protected]
e-mail: [email protected]
e-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

The EU established an early warning system by introducing the Macroeconomic Imbalance Procedure (MIP) in the wake of the recent recession. Nevertheless, it has been found by some authors to be rather vague when launching the Excessive Imbalances Procedure. Performed analysis reflects on such views and treats the MIP indicators as a system while assessing the significance of all particular variables separately. This assessment was accomplished by applying a multivariate unbalanced logit model, utilising all 14 MIP headline indicators, using time horizons ranging from one to three years before crisis, which was represented by periods with output gap lower than negative 2 per cent. The approach was confronted with the estimates of a linear probability model to provide an idea about the robustness of the results. In the short term, activity rates, youth unemployment rates and private sector debt are the best performing indicators, complemented by current account balances in the long term.

Keywords

MIP scoreboardEarly warning systemsBinary response modelsLogitC25C52H12
Type
Research Articles
Information
National Institute Economic Review , Volume 239 , February 2017 , pp. R32 - R52
Copyright
Copyright © 2017 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

This research was financed under the Horizon 2020 programme, FIRSTRUN (grant 649261). We would like to thank the anonymous referees and the seminar participants at the National Bank of Slovakia for helpful suggestions.

References

Alcidi, C. and Gros, D. (2014), ‘Implications of EU governance reforms. Rationale and practical application’, Etla Reports, no. 25.Google Scholar
Alessi, L., Antunes, A., Babaecky, J., Baltussen, S., Behn, M., Bonfim, D., Bush, O., Datken, C., Frost, J., Guimaraes, R., Havránek, T., Joy, M., Kauko, K., Matěju, J., Monteiro, N., Neudorfer, B., Peltonen, T., Rodrigues, P.M.M., Rusnák, M., Schudel, W., Sigmund, M., Stremmel, H., Šmídková, K., Van Tilburg, R., Vašíček, B. and Žigarová, D. (2014), ‘Comparing different early warning systems: results from a horse race competition among members of the macro-prudential research network’, preliminary and incomplete draft. Available at: <http://www.ecb.europa.eu/events/pdf/conferences/140623/Vasicek-et-al_Comparing-Different-Early-Warning-Systems.pdf?F96bbb525a26071ecf97f9154fb3cc73>..>Google Scholar
Alessi, L. and Detken, C. (2011), ‘Quasi real time early warning indicators for costly asset price boom/bust cycles: a role for global liquidity’, European Journal of Political Economy, 27, 3, pp. 520–33.CrossRefGoogle Scholar
Antunes, A., Bonfim, D., Monteiro, N. and Rodrigues, P.M.M. (2014), ‘Early warning indicators of banking crises: exploring new data and tools’, Banco de Portugal, Economic Bulletin.Google Scholar
Babecky, J., Havránek, T., Matějů, J., Rusnák, M., Šmídková, K. and Vašíček, B. (2013), ‘Leading indicators of crisis incidence: evidence from developed countries’, Journal of International Money and Finance, 35, pp. 1–19.CrossRefGoogle Scholar
Barrell, R., Davis, E.P., Karim, D. and Liadze, I. (2010a), ‘Bank regulation, property prices and early warning systems for banking crises in OECD countries’, Journal of Banking and Finance, 34, pp. 2255–64.CrossRefGoogle Scholar
Barrell, R., Davis, E.P., Karim, D. and Liadze, I. (2010b), ‘Was the subprime crisis unique? An analysis of the factors that help predict banking crises in OECD countries’, NIESR Discussion Paper No. 363.Google Scholar
Barrios, S., Barry, F. and Strobl, E. (2002), ‘FDI and structural convergence in the EU periphery’, Centre for European Policy Research, Workshop and Conferences, no. 2319.Google Scholar
Berti, K., Salto, M. and Laquien, M. (2012), ‘An early-detection index of fiscal stress for EU countries’, European Commission Economic Papers, no. 475.Google Scholar
Borgy, V., Clerc, L. and Renne, J. P. (2014), ‘Measuring aggregate risk: can we robustly identify asset-price boom-bust cycles?’, Journal of Banking and Finance, 46, pp. 132–50.CrossRefGoogle Scholar
Cameron, A.C. and Trivedi, P.K. (2010), Microeconometrics Using Stata, Revised Edition, Stata Press.Google Scholar
Canova, F. (1994), ‘Were financial crises predictable?’, Journal of Money, Credit and Banking, 26, 1, pp. 102–24.CrossRefGoogle Scholar
Checherita, C. and Rother, P. (2010), ‘The impact of high and growing government debt on economic growth: an empirical investigation for the Euro Area’, ECB Working Paper, no. 1237.Google Scholar
Christensen, I. and Li, F. (2014), ‘Predicting financial stress events: a signal extraction approach’, Journal of Financial Stability, 14, pp. 54–65.CrossRefGoogle Scholar
Cazacu (Bancu), A.-M. (2015), ‘Export performance of central and eastern European countries: macro and micro fundamentals’, Procedia – Social and Behavioral Sciences, 195, pp. 514–23.Google Scholar
Council of the European Union (2016), ‘Outcome of proceedings, alert mechanism report 2106 – ECOFIN Council conclusions’, 15 January, http://data.consilium.europa.eu/doc/document/ST-5318-2016-INIT/en/pdf.Google Scholar
Crespo, N. and Fontoura, M.R. (2007), ‘Integration of CEECs into EU market: structural change and convergence’, Journal of Common Market Studies, 45, 3, pp. 611–32.CrossRefGoogle Scholar
Csortos, O. and Szalai, Z. (2013), ‘Assessment of macroeconomic imbalance indicators’, MNB Bulletin.Google Scholar
De Grauwe, P. (2012), ‘In search of symmetry in the Eurozone’, CEPS Policy Brief, no. 268.Google Scholar
Dumitrescu, E.I., Hurlin, CH., Candelon, B. (2010), ‘How to evaluate an early warning system: towards a unified statistical framework for assessing financial crises forecasting methods’, available at <https://hal.inria.fr/file/index/docid/450050/filename/EWS_candumhur.pdf>..>Google Scholar
Essl, S. and Stiglbauer, A. (2012), ‘Prevention and correction of macroeconomic imbalances: the excessive imbalance procedure’, Monetary Policy and The Economy Q4/11, pp. 99–113.Google Scholar
European Central Bank (2015), ‘Real convergence in the euro area: evidence, theory and policy implications’, ECB Economic Bulletin, Issue 5, pp. 30–45.Google Scholar
European Commission (2011), ‘Commission staff working document. Scoreboard for the surveillance of macroeconomic imbalances: envisaged initial design’, Brussels, 8.11.2011, SEC (2011) 1361 final.CrossRefGoogle Scholar
European Commission (2012), ‘Scoreboard for the surveillance of macroeconomic imbalances’, European Economy Occasional Papers, no. 92.Google Scholar
European Commission (2015a), ‘Cyclical Adjustment of Budget Balances’, Autumn 2015.Google Scholar
European Commission (2015b), ‘Communication from the Commission to the European Parliament, the Council and the European Central Bank. On steps towards completing economic and monetary union’, Brussels, 21.10.2015, COM (2015) 600 final.Google Scholar
European Commission (2015c), ‘Report from the Commission to the European Parliament, the Council, the European Central Bank and the European Economic and Social Committee. Alert Mechanism Report 2016’, Brussels, 26.11.2015, COM (2015) 691 final.Google Scholar
European Commission (2016), ‘The macroeconomic imbalance procedure. Rationale, process, application: a compendium’, European Economy Institutional Papers, 039, November.Google Scholar
Frankel, J. and Saravelos, G. (2010), ‘Can leading indicators assess country vulnerability? Evidence from the 2008–9 Global Financial Crisis’, Harvard Kennedy School, mimeo.Google Scholar
Hallwirth, V. (2014), ‘Überwachung der Wettbewerbsfähigkeit in der Europäischen Wirtschafts– und Währungsunion’, Wirtschaftsdienst, 94, 11, pp. 798–805.CrossRefGoogle Scholar
Hartmann, P. (2015), ‘Real estate markets and macroprudential policy in Europe’, ECB Working Paper Series, no. 1796.Google Scholar
Hošková, A. (2001), ‘Impact of foreign direct investment on the economy of Slovakia’, National Bank Slovakia.Google Scholar
Kaminsky, G., Lizando, S. and Reinhart, C. (1998), ‘Leading indicators of currency crisis’, IMF Staff Papers, 45, 1.Google Scholar
Kaminsky, G.L. and Reinhart, C.M. (1999), ‘The twin crises: the causes of banking and balance-of-payments problems’, American Economic Review, 89, 3, pp. 473–500.CrossRefGoogle Scholar
Kamps, Ch., De Stefani, R., Leiner-Killinger, N., Rüffer, R. and Sondermann, D. (2013), ‘Would the strengthened EU fiscal and economic governance framework have helped signalling sovereign debt crises?’, Paper presented at Banca d'Italia 15th Public Finance Workshop.Google Scholar
Kamps, Ch., De Stefani, R., Leiner-Killinger, N., Rüffer, R. and Sondermann, D. (2014), ‘The identification of fiscal and macroeconomic imbalances. Unexploited synergies under the strengthened EU governance framework’, ECB Occasional Paper Series, no 157.Google Scholar
Marchiori, L., Pierrard, O. and Sneessens, H. R. (2011), ‘Demography, capital flows and unemployment’, IZA DP, no. 6094.Google Scholar
Moschella, M. (2014), Monitoring macroeconomic imbalances: is EU surveillance more effective than IMF surveillance?’, Journal of Common Market Studies, 52, 6, pp. 1273–89.CrossRefGoogle Scholar
Official Journal of the European Union (2011a), ‘Regulation (EU) No 1174/2011 of the European Parliament and of the Council of 16 November 2011 on enforcement measures to correct excessive macroeconomic imbalances in the euro area’.Google Scholar
Official Journal of the European Union (2011b), ‘Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances’.Google Scholar
Official Journal of the European Union (2012), ‘Consolidated version of the Treaty on the Functioning of the European Union’.Google Scholar
Reinhart, C.M. and Rogoff, K.S. (2009), This Time is Different: Eight Centuries of Financial Folly, Princeton, N. J.: Princeton University Press.Google Scholar
Sarlin, P. (2013), ‘On policymakers’ loss functions and the evaluation of early warning systems’, ECB Working Paper Series, no. 1509.Google Scholar
Schularick, M. and Taylor, A.M. (2012), ‘Credit booms gone bust: monetary policy, leverage cycles, and financial crises, 1870–2008’, American Economic Review, 102, 2, pp. 1029–61.CrossRefGoogle Scholar
Stankovičová, I. and Vojtková, M. (2007), Viacrozmerné štatistické metódy s aplikáciami, Bratislava, Iura edition.Google Scholar
Taylor, A.M. (2012), ‘The great leveraging’, NBER Working Paper, no. 18290.Google Scholar
Verick, Sh. (2011), ‘Giving up job search during a recession: the impact of the global financial crisis on the South African labour market’, IZA DP, no. 6116.Google Scholar
Wooldridge, J.M. (2010), Econometric Analysis of Cross Section and Panel Data, Second edition, MIT Press.Google Scholar
Wooldridge, J.M. (2013), Introductory Econometrics: A Modern Approach, Fifth international edition, USA, Cengage Learning.Google Scholar