The Application of the Artificial Neural Network Early Warning ...

foulchilianAI and Robotics

Oct 20, 2013 (3 years and 8 months ago)

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ABSTRACT

T
HE
A
PPLICATION OF THE
A
RTIFICIAL
N
EURAL
N
ETWORK
E
ARLY
W
ARNING
S
YSTEM
M
ODEL FOR
P
REDICTING
I
NDONESIA
N

C
URRENCY

C
RISES

by

Dr.
Syaifullah
, SE, M.Ec

Fiscal Policy Agency, Ministry of Finance of the Republic of Indonesia

Email:
syaifullahmof@gmail.com

and
syaifullah@fiskal.depkeu.go.id

Following the collapse of Breton Woods in the 1970s, the frequencies of crises as
well as the numb
er of countries hit by crises has tended to increase.

Even today,
currency crises are
still
a threat for many countries around the world and are
events that will undoubtedly continue into the future.
Indonesia is no
exception, for the country which has an
open economy has experienced several
financial crises, with the Asian financial crisis
of 1997

being the most severe to
hit the country.
It affected not only Indonesian macro economy but also the
country’s social and political aspects,
as a result this cri
sis is known as a multi
-
dimension crisis.

The huge recovery cost and enormous impacts of these crises encourage policy
makers and economists to find ways to prevent these crises. This study aims to
contribute to these efforts by constructing
EWS model

to
predict these crises in
particular for Indonesia.
With this in mind,
the study will
applies the artificial
neural network
(ANN)
model.

The empirical findings indicate that
this EWS model

perform
s

well in
predicting the Indonesian currency crises
. T
his
findings support that the
currency crises can be predicted and the EWS models can be used as one of the
efforts to prevent the recurrent currency crises in the future.

Keyword:
Currency

crises,
artificial neural network model
, early warning system model,
I
ndonesian economy.