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Economic Bubbles: A Story of New Eras, Emotional Contagion and Structural Support

Textbook 2014 83 Pages

Business economics - Investment and Finance

Summary

Economic bubbles go hand in hand with financial inventions, financial liberalization and excess leverage. Frequently these bubbles are fueled by the overoptimistic outlook not only of the so-called experts or gurus but also by the extremely positive perception of the general public. Great hikes in asset and commodity markets are believed to be a result of the new economy that has been created. Historical levels of markets and where the level of fundamentals should really be are either unknown or completely ignored. Partially one could account this to the short financial memory of market participants. Partially the abstract nature of the markets and the complexity of financial products themselves may be the reason. This paper tries to identify regularities defining economic bubbles concentrating on the most recent ones. Different approaches in explaining market movements will be discussed. Further, not only structural but especially psychological factors which may cause the emergence, the inflation and the implosion of economic bubbles are considered. Already existing agent based models, policy responses and possible future policy measures are analyzed and evaluated.

Details

Pages
83
Type of Edition
Erstausgabe
Year
2014
ISBN (eBook)
9783954897025
ISBN (Book)
9783954892020
File size
546 KB
Language
English
Catalog Number
v312675
Grade
Tags
Possible market policies to avoid extreme movements in the markets Financial and economic bubbles The Japanese asset price bubble Animal spirits – psychological factors for market movements the dot com bubble and the recent financial crisis

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Title: Economic Bubbles: A Story of New Eras, Emotional Contagion and Structural Support