Low Risk as a Predictor of Financial Crises
Abstract: Reliable indicators of future financial crises are important for policymakers and practitioners. While most indicators consider an observation of high volatility as a warning signal, this column argues that such an alarm comes too late, arriving only once a crisis is already under way. A better warning is provided by low volatility, which is a reliable indication of an increased likelihood of a future crisis.
File(s): File format is text/html https://www.federalreserve.gov/econres/notes/feds-notes/low-risk-as-a-predictor-of-financial-crises-20180509.html
Provider: Board of Governors of the Federal Reserve System (U.S.)
Part of Series: FEDS Notes
Publication Date: 2018-05-09