Best-Evidence Synthesis: An Alternative to Meta-Analytic and Traditional Reviews:
This paper proposes an alternative to both meta-analytic and traditional reviews. The method, “best-evidence synthesis,” combines the quantification of effect sizes and systematic study selection procedures of quantitative syntheses with the attention to individual studies and methodological and substantive issues typical of the best narrative reviews. Best-evidence syntheses focus on the “best evidence” in a field, the studies highest in internal and external validity, using well-specified and defended a priori inclusion criteria, and use effect size data as an adjunct to a full discussion of the literature being reviewed.
We compare how logit (fixed effects) and probit early warning systems (EWS) predict insample and out-of-sample currency crises in emerging markets (EMs). We look at episodes of currency crises that took place in 29 EMs between January 1995 and December 2012. Stronger real GDP growth rates and higher net foreign assets significantly reduce the probability of experiencing a currency crisis, while high levels of credit to the private sector increase it. We find that the logit and probit EWS out-of-sample performances are broadly similar, and that the EWS performance can be very sensitive both to the size of the estimation sample, and to the crisis definition employed. For macroeconomic policy purposes, we conclude that a currency crisis definition identifying more rather than less crisis episodes should be used, even if this may lead to the risk of issuing false alarms.