The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Speculative Bubbles

  • Miguel A. Iraola
  • Manuel S. Santos
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2555

Abstract

We review some work on speculative bubbles on asset prices. Some empirical evidence suggests that asset prices fluctuate more than their fundamental values, and so asset pricing bubbles do occur. Empirical tests on bubbles are inconclusive. Also, most commonly used models in macroeconomics and finance can generate bubbles only under rather specialized assumptions.

Keywords

Agency problems Arbitrage Asymmetric information Backward induction Behavioural finance Bounded rationality Fiat money Fiscal theory of the price level Fundamental theorem of asset pricing Infinite horizons Liquidity constraints Martingales Mississippi bubble Noise traders Overlapping generations Present value Public debt Quantity theory of money South Sea bubble Speculative bubbles Stock price volatility Strategic behaviour Transversality condition Tulipmania 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Miguel A. Iraola
    • 1
  • Manuel S. Santos
    • 1
  1. 1.