Abstract
A bubble may be defined loosely as a sharp rise in price of an asset or a range of assets in a continuous process, with the initial rise generating expectations of further rises and attracting new buyers — generally speculators interested in profits from trading in the asset rather than its use of earning capacity. The rise is usually followed by a reversal of expectations and a sharp decline in price often resulting in financial crisis. A boom is a more extended and gentler rise in prices, production and profits than a bubble, and may be followed by crisis, sometimes taking the form of a crash (or panic) or alternatively by a gentle subsidence of the boom without crisis.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Bibliography
Blanchard, O. and Watson, M.W. 1982. Bubbles, rational expectations and financial markets. In Crises in the Economic and Financial Structure, ed. P. Wachtel, Lexington, Mass.: Heath.
Flemming, J.S., Goldsmith, R.W. and Melitz, J. 1982. Comment. In Financial Crises: Theory, History and Policy, ed. C.P. Kindleberger and J.-P. Laffargue, Cambridge: Cambridge University Press.
Flood, R.P. and Garber, P.M. 1980. Market fundamentals versus price-level bubbles: the first tests. Journal of Political Economy 88(4), August, 745–70.
Kindleberger, C.P. 1978. Manias, Panics and Crashes: A History of Financial Crises. New York: Basic Books.
Minsky, H.P. 1982a. Can ‘It’ Happen Again?: Essays on Instability and Finance. Armonk: Sharpe.
Minsky, H.P. 1982b. The financial instability hypothesis. In Financial Crises: Theory, History and Policy, ed. C.P. Kindleberger and J.-P. Laffargue, Cambridge: Cambridge University Press.
Editor information
Copyright information
© 1991 Palgrave Macmillan, a division of Macmillan Publishers Limited
About this chapter
Cite this chapter
Kindleberger, C.P. (1991). Bubbles. In: Eatwell, J., Milgate, M., Newman, P. (eds) The World of Economics. The New Palgrave. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-21315-3_3
Download citation
DOI: https://doi.org/10.1007/978-1-349-21315-3_3
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-55177-6
Online ISBN: 978-1-349-21315-3
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)