Study on Early Warning of Bubble Economy Crisis by Stages Based on Dynamic Model

Bubble economy belongs to a multistage, and it is the dynamic process for mutual transformation among different stages. The authors of this paper analyzed and identified different stages of the bubble economy. The authors then used the dynamic ordered logit model built based on this analysis to connect different stages of the dynamic evolution of the bubble economy, depict the economic status from stable development to asset price bubble, and then evolved the model into the dynamic process of the bubble economy. They selected seven economic indexes, obtained balanced panels of 36 countries in 21 years from 1996 to 2016, and used 756 annual national observed values in total as demonstration samples. The results show that the latent dynamic model and forecasting model proposed in this paper can effectively describe the dynamic changes of economic situation and realize the recursive update and real-time forecasting of dynamic early warning system.