| Greece, Portugal, Ireland, Spain and Italy, which consist of PHGS, have been involved into the concerns of Sovereign Debts’Default problem since2009. The European Debt Crisis has become the hot issue which affects the stability of EU’s Society and Economy. As the most successful model of regional integration, EU is suffering from unprecedented crash and pressure, even facing the threat of collapse.The scholars pay lots of attention to the cause of the Sovereign Debt Crisis, and majority of them believe that absence of effective administrate system decays the convergence of macroeconomic policies. Thus, EU doesn’t manage to solve the problem of imbalance growth among its member states, and finally, this failure lead to the explosion of the Debt Crisis.This paper is based on the Optimum Currency Area theory which supports the EU’s economic integration as the foundation. First, the paper concludes the EU’s policy arrangement and performance of monetary, fiscal, trade and production factors’flow. Secondly, a panel model is introduced to analyze the cause of the crisis based on the description of the procedure of the European Debt Crisis. Then, according to the results of that model, explanations are provided on both macro and micro view from the EU to the individual member state, so are the response plan in short term and long. In the end, a forecasting will be illustrated over the analysis before.According to the paper’s research, the conclusions can be summarized as:The absence and distortion of the convergence of EU’s macroeconomic policies were ignored till the European Debt Crisis, and they are the root of the event. Stagnation, imbalanced trade and public finance, unemployment, skewed growth and crash from capital market all affect the formation of the Crisis, and EU fail to manage these problems. After a comprehensive review, the stability and trend of Ireland, Spain and Italy are much better than Greece and Portugal, and the EU or the Euro zone won’t be collapsed. |
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