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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: tomas.domonkos@savba.sk
e-mail: filip.ostrihon@savba.sk
e-mail: ivana.sikulova@savba.sk
e-mail: maria.siranova@savba.sk
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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

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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.

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