As 
I was growing up, I got really fascinated
by the idea of travelling back in time to
fix something that went wrong! But, until
our scientists make time travel possible,
we had to search for other alternatives to
deal with problems: namely trying to forecast
the future.
The basic idea is: if we could know now what
will happen next, we can fix it now before
it happens. That's why we now have weather
forecasts and EWS for earthquakes etc.
In the same sense, the basic idea of my dissertation
is to build a model to forecast financial
crises.. Why? Because we all get hurt when
we lose money, or when the prices of our favourite
shopping stores skyrocket every time there
is a crisis. But, what if we could have a
EWS to tell policy makers that the economy
is approaching a crisis. And even more than
that: tell them what exactly they should fix
to avoid the crisis?!
In the financial economic literature, there
have been several attempts so far to build
such models, but none of them was able to
predict the devastating international effects
of the current global crisis.
However, a recent paper in 2010 suggested
that the problem of the previous econometric
models was in the way they quantified the
crisis episodes, and they suggested a better
definition. And last year, in 2012, another
paper suggested a more dynamic approach to
build such models.
Therefore, the main objective of my dissertation
is to integrate the new definition of crisis
episodes with the new dynamic technique to
build an improved econometric model for: currency,
banking, and sovereign debt crises.
I will also add something else that other
papers failed to do in the past, that is,
take into consideration the different natures
of advanced and developing countries when
building the model, so as to make it as generic
as possible.
I will test the outcome of my model in predicting
all the crisis episodes that occurred in 24
countries around the globe over the past 30
years to evaluate the accuracy and the predictive
power of my model.
However, despite all these efforts, I must
say that: I still prefer if we could all just
keep calm and time travel!
