The Sovereign Debt Crisis

At present, the global sovereign debt crises become the focus of the world. From the Iceland debt crisis to the debt crisis in the United States, and the European debt crisis, debt crisises become more frequent and ferocious. Many scholars are questioning that the inappropriate macroeconomic policies led to the frequent outbreak of the debt crisis. Many economists even shouted "Bury Keynesian"。 What kind of relationship between macroeconomic policies and the sovereign debt crisis? We studied this question in the debt crisis from the perspective of macroeconomic policy.First, we review the historical debate on macroeconomic policies, and analyzes in new neoclassical and Keynesian perspective to find there characteristics of the macroeconomic policies and their impact on the role of the sovereign debt crisis. In addition, we make a summary of the research in the sovereign debt crisis, analysis some of the conclusions draw by scholars from various countries. Also we find some conclusions of the study of the relationship between macroeconomic policies and the sovereign debt crisis.Second, there is a number of debt crisises in history. This paper research and combing the Latin American debt crisis, the Russian debt crisis, the debt crisis in Argentina and the current European debt crisis,U.S. debt crisis. Through the study of the historical background of the debt crisis, the paper summarizes the reasons and the process for the outbreak of the debt crisis.By examing the macroeconomic policies of the previous sovereign debt crisis, we draw a conclusion that countries in sub-national economic development strategy, excessive government spending, irrational monetary policy and exchange rate policy lead to a sovereign debt crisis.Then, we established a simple framework of a general equilibrium analysis, and deduced that government spending, current account, changes in interest rates will influence the debt of a country. Based on this conclusion we build the logit model and the probit model to make empirical tests, and we found these factors can indeed affect the probability of the debt crisis.Finally, according the conclusions of this study, the paper proposes that the development of a country shoud pay attention to the internal and external balance, and Keynesian macroeconomic policy should be used with caution. Then we make an outlook of the current sovereign debt crisises, and put forward some recommendations of China’s local government’s debt.