Objective EARLINESS.eu proposes a new European early warning system (EWS), able to identify and signal economic vulnerabilities in order to allow policy makers to intervene in a timely manner. The ongoing European financial crisis poses a serious challenge to the stability of the euro area and growth prospects in Europe. The aim of the EARLINESS.eu project is to implement a EWS for systemic risk to prevent and mitigate financial instability by exploiting the linkages among the financial markets and the real economy. Given the potentially high and unsustainable costs caused by systemic crises, it is of fundamental importance to establish a comprehensive system of early warning signals and indicators to monitor them. Recent studies suggest that empirical analysis should focus on the macroeconomic and financial shocks transmission across countries, allowing for nonlinear propagation of these shocks. The innovative purpose of EARLINESS is to fill this gap by modelling nonlinear interactions between the financial market and the macroeconomic system. The main challenge is the realization of a comprehensive system able to detect and measure each marginal change in the sources of systemic risk by developing an innovative building block structure. A novel Dynamic Quantile Factors model is introduced to extract the latent signal of systemic risks at micro and macro level from a panel of institutions belonging to the European area and partner countries. The project uses state-of-the-art systemic risk measures and integrates new methodologies in financial econometrics, systemic risk measurement and big data analysis tools. According to the Macroprudential Research Network of the ECB, the implementation of macroprudential policy is still at an early stage and much effort is needed to support policymakers in designing mechanisms for prudential tools. The EARLINESS project can deliver an important contribution to this. Fields of science social scienceseconomics and businesseconomicseconometricssocial scienceseconomics and businesseconomicsmacroeconomicsnatural sciencescomputer and information sciencesdata sciencebig datanatural sciencesmathematicspure mathematicstopologysocial scienceseconomics and businesseconomicsmonetary and finances Programme(s) H2020-EU.1.3. - EXCELLENT SCIENCE - Marie Skłodowska-Curie Actions Main Programme H2020-EU.1.3.2. - Nurturing excellence by means of cross-border and cross-sector mobility Topic(s) MSCA-IF-2015-EF - Marie Skłodowska-Curie Individual Fellowships (IF-EF) Call for proposal H2020-MSCA-IF-2015 See other projects for this call Funding Scheme MSCA-IF-EF-ST - Standard EF Coordinator GESELLSCHAFT FUR KAPITALMARKTFORSCHUNG EV Net EU contribution € 171 460,80 Address THEODOR-W-ADORNO-PLATZ 3 60323 FRANKFURT AU MAIN Germany See on map Region Hessen Darmstadt Frankfurt am Main, Kreisfreie Stadt Activity type Research Organisations Links Contact the organisation Opens in new window Website Opens in new window Participation in EU R&I programmes Opens in new window HORIZON collaboration network Opens in new window Total cost € 171 460,80