The Construction Of The European Debt Crisis Early Warning

European debt crisis which began at the end of2009was the most serious sovereign one since the inception of euro zone and also the history of infection range, the impact of the crisis and rescue one of the largest. European sovereign debt crisis stems from structural imbalances in the euro area economy, long-term behavior of over-indebtedness, liabilities style high welfare security system, euro zone independent fiscal policy and a unified monetary policy contradiction between the2008global financial crisis and fueled by international rating agencies, etc. In this paper, the debt crisis in five European countries for the study, qualitative analysis and quantitative analysis from two perspectives, the European debt crisis and to analyze the reasons for this based on the model of the debt crisis warning.This paper mainly done the following aspects:(1) From the point of view of the deficit ratio of debt financial situation of the country in crisisThis paper established a state-space model in the form of dynamic factor model, the deficit ratio by estimating common factors and national debt crisis countries Factor Analysis deficit rate movements and their common characteristics. The results show that the debt crisis in the former, although the national deficit rate fluctuations are quite different, but the five-nation deficit increased significantly.(2) From the perspective of the debt ratio debt crisis in the financial situation of the countryDebt ratio from five countries the statistical characteristics of point of view, in the event of the debt crisis, all five countries debt ratio exceeds60%, the " Stability and Growth Pact" set forth in the ceiling. Since1995, Greece’s debt ratio is always above90%, Italy’s debt ratio is at100%or more, can be described as ahead of the other three countries. In2008, the global financial crisis, in addition to Italian debt ratio less volatile, the other four countries have substantially increased debt basic.(3) Construction of the European debt crisis early warning model In this paper, the scale of government debt, the EU country’s social security system, the labor market situation of the euro area monetary and financial systems and other aspects of the European debt crisis cause. According to the existing literature and the European debt crisis causes, selected ten indicators for early warning indicator system, using the Panel Probit Model to build the debt crisis early warning model. Panel Probit estimation model and predict the probability of the sample tested, the test results show that the probability forecast accurately identify early warning model was96.92%, indicating a relatively high reliability prediction model.(4) Analysis of the European debt crisis on China’s economic development has brought inspirationChina has became the world’s largest creditor, as has huge foreign exchange reserves, China is also unlikely in the short term sovereign debt crisis, but the European debt crisis to China’s economic development to provide sufficient warning significance, this paper analyzes the country from six how to reduce the financial risks and avoid the debt crisis.Innovation of this paper as follows:(1) From the perspective of quantitative analysis, the domestic outbreak of the2009European sovereign debt crisis early warning model of relatively small, most of the literature focuses on qualitative analysis or research in emerging markets and other countries and regions of the debt crisis. In this paper, two quantitative and qualitative analysis, this paper analyzes the reasons for the European debt crisis and build a risk prediction.(2) In the analysis of "PIIGS" deficit condition, this paper established a state-space form of dynamic factor model, extracted five countries reflect fluctuations in the deficit ratio reflects the common factors and characteristics of each country’s own national factor, in order to analyze five State deficit rate movements and their common characteristics.The downside in this article as follows: (1) For the definition of the debt crisis. Academia, the debt crisis has not yet unified conclusion, there are many different definitions of methods, on the "PIIGS " debt crisis is no specific time of unified authority conclusive, although different definitions herein by reference considering the time lag of the debt crisis. However, the debt crisis in the five countries of the time, there are still insufficient definition.(2) The selection of early warning indicators. European debt crisis for many reasons, many factors also can be quantified, we can not select all, this article on the basis of previous literature, considering the availability of data, the sample size limits selected some indicators. But in the early warning indicators selected integrity, but also there are some problems. For example, reflecting the high welfare social security spending accounts for a percentage of GDP, because of its quarterly non-availability of data can not be used.(3) The selection of the sample time. Because of the limited time available quarterly data, this paper data are early warning indicators from2000to2012quarterly data, the time span is not long. From the debt ratio point of view of the five countries the debt crisis of the reasons for the data used for the1995to2012annual data, as used herein indicators intended all using annual data, so that it can more easily define "PIIGS " took place the debt crisis of the time, but most indicators data are the data after1995, the time span is shorter, affect the model results, good results can not be drawn.