The Asian currency crises: lessons for an early warning system

Is it possible to devise a funtioning early warning system for currency crises, and is there a role for the analysis of indicators beyond economic fundamentals? In light of the Asian crisis, the issue is examined both theoretically and empirically. An analytical framework to detect macroeconomic and structural vulnerability as well as changes in the perception of fundamentals is developed, and a range of indicators is explored. An exemplary early warning system which includes investors' sentiments is applied retrospectively in case studies of the crises in Indonesia and Thailand in 1997, Mexico 1994 and three other Latin American countries. [author]