As a solid part of financial crisis, external debt crisis lasts longer and causes more serious issues than bank crisis and currency crisis. Whereas governments and international organizations now take effort in the prediction of currency crisis and bank crisis, we actually know much less about external debt crisis and the risk that external debt crisis strikes is relatively higher due to our poor knowledge.The unique cause of the external debt crisis and what it has to do with fundamental economic factors has not been well understood. Even in the empirical research, the prediction of external debt crisis is a subordination of financial crisis prediction. So it is of great implications that we take the prediction of external debt crisis as a major job in preventing financial crisis.In response of the urgent call for proper indicators in EWS for external debt crisis, the paper goes in depth through the theoretical literatures in search of proper variables for external debt crisis prediction and test them in the binary logistic model. The sample is the dataset of external crisis of 43 countries in 1990-2009. The result shows that inflation, external debt service to export, and average grace period are leading indicators. The binary logistic model predicts 72.1 percent of all crises entries while sending several false alarms. |