Study On Financial Crisis Based On The Current Account Imbalances Sustainability

Global current-account imbalances is an uncertainty factor which can affect the health ofthe world economic development and after many years of accumulated has developed into animportant hidden danger threat to global economic vitality. At present, the new situation in thefield of international finance makes the global current account imbalances have become moreprominent. Caused by the United States subprime loan crisis of the financial turmoil in theUnited States of America net portfolio inflows of capital weakening, means of financing capitalinflows is worrying for the United States of America’s huge current account deficit outlook,which exacerbated the global current account imbalances. This thesis will research the possibilityof financial crisis based on current account imbalances sustainability perspective.Combined with previous studies, this thesis using1990—2010data from36countries(regions)14indicator variables, build Probit model to measure the impact of each indicator ofthe financial crisis, and based on the model to measure the BRICS probability of occurrence ofthe country’s financial crisis; then all other variables held constant, the ratio of the currentaccount balance to GDP (CA) virtualization, in accordance with current account surpluses anddeficits is divided into two parts, namely, when the surplus CA=1, the deficit when CA=0(ietext DD conditions), get new regression equation to calculate the probability of BRICS financialcrisis; while the current account balance to GDP ratio to-5%to the boundary, and is greater than-5%current can be maintained, CA=1, is unsustainable less than-5%, CA=0(ie text XKWconditions), get new regression equation to calculate the probability again BRICS financialcrisis. Comparison of three probability values can be concluded:(1) GDP growth, current accountbalance, the occurrence of negative domestic credit associated with the financial crisis;M2growth, M2/total reserves, fiscal balance/GDP, the difference between domestic and internationalinterest rates the financial crisis showed a positive correlation;(2) the current account surplus forthe year (country), the relative probability of actual in DD conditions will reduce the probabilityof financial crises, and the deficit year (national) crisis in DD conditions will increase theprobability of occurrence;(3) current account deficit in excess of5%GDP (ie in line with articleassumes: a deficit of more than5%as unsustainable) Year (national) crisis probabilities fromDD conditions to XKW conditions increases;(4) the probability of the condition of currentaccount imbalances, but the condition can be maintained, the crisis is less than unsustainablesituation.