Causes Of Euro Zone Sovereign Debt Crisis And Effects Of Contagion

The Greek sovereign debt crisis Erupted in 2010 take the euro economy in trouble again when it has not yet recovered from the global financial crisis. After experience the changes of 2010, Ireland, Italy, Spain and Portugal, also grew out of the financial crisis situation, facing a serious risk of sovereign default. In addition, Germany, France and Britain, the powerful countries of euro-zone is also not optimistic, facing severe challenges. Sovereign debt crisis transfer into financial markets in the euro area countries very quickly. Therefore this article studies three issues:The collective exposure to sovereign debt and government deficits, is there deep-seated contradictions in these countries; the crisis is possible International transmission; and if sovereign debt crisis is infective, how should the world's governments to prevent.Based on existing literature, this article uses both within and outside the euro zone sovereign debt reason to explain this crisis. Secondly, after further in-depth analysis of the transmission mechanism of sovereign debt crises, this article uses the VAR model (VAR) to make an empirical test of sovereign debt crises. Then from the quantitative point of view, this article gives us a better understanding of the spread of the crisis, and puts forward recommendations related to prevention.