economic bubble theory

economic bubble theory
foam to describe an economic entity rapid prosperity for some time, and then sharply rise and fall of the changes can be quite appropriate. Nature of the bubble occurs quickly, more quickly shattered. A drop of soapy water, breath can blow a dazzling eye-catching bubble. But did not last long, the larger the bubble, burst faster. Under normal circumstances, people bubble economy as a synonym of false prosperity. Like a soap bubble, there seems colorful, but there is no containing the middle, once the bubble burst, boom, like a sudden dream disappear as the replacement.
published by Palgrave in 1926 in the English dictionary definition of a bubble economy: “Any highly speculative bad business behavior.” This seems clear enough. Thus, in 1987 edition of the Palgrave Dictionary of Economics, quoted a famous economist, the former president of the American Economic Association Kindleberger (C. Kindleberger), then re-definition of a bubble economy: “the term bubble state, random point that is one or a series of assets in a continuous process of sharply rising prices, the prices start rising prices make it even produced the expected, so he has attracted new buyers – who generally just want to make a profit through the sale, but The use of these assets and their ability to generate profits is not interested. With the expected downturn in prices often, followed by the price drop, and finally end the financial crisis. usually 'boom' time longer than the bubble state, prices, production and profits increase is relatively modest number. that they might then is to fall (or fear) in the form of crisis or prosperity faded to an end rather than a crisis. “[1]
in modern economy, people are far less than the exchange of specific goods in exchange for some symbols, such as currency, stocks, bonds, foreign exchange, futures, options contracts, checks, money orders and so on. Peter Drucker (PeterDrucker) said: “capital mobility, currency exchange, financial and other signs the economy from products, services and other real economy out of a fully independent.” “This is one of the most striking changes but the hardest to understand.” [2] Because fewer opportunities for industrial investment, return on investment is relatively low, while the rate of investment return of financial assets is relatively high. In the false lure of high rates of return under a lot of money in the economy, ineffective idle symbol does not constitute real growth. With the real economy is not directly related to the proliferation of funds of Ling Yu, the real output and departments in response to lack of funds and the gradual decline, which Jiushi often been said of the economic bubble Huahuochanye hollowed out.
2, the bubble does not mean the bubble economy.
booming economy will inevitably produce some foam. Like a mountain stream, water fast, inevitably aroused some of the bubble, but it does not thereby determine the water quality of streams what changes have taken place. Stream of bubbles and soap bubble blowing different. Stream water drinkable and soapy water is entirely impossible. Different water quality need to use different treatment methods.
bubble refers to the process of economic development imbalances often occur. Together these imbalances is the up and down the concrete representation of the economic cycle. Bubble economy, while others refer to as economic speculation, which led to the phenomenon of market price fluctuations. Because the causes of the two different damage caused by different solutions to this problem is different, so distinguishing the bubble economy and the economic bubble is not a simple word game. If you do not clear the distinction between the two, it is easy to real bubble economy and the general confusion of the economic bubble is often said, is not conducive to recognize the bubble economy, and to take corresponding countermeasures.
from the supply and demand point of view, in the normal market mechanism, price increases will inevitably lead to a drop in demand. However, when the onset of the bubble economy, on the contrary, the more prices rise, demand for the more prosperous, to buy up not to buy off. This is to determine whether the bubble economy, an important indicator identification.
bubble economy will result in volatility in some commodity prices, but the converse is not necessarily correct. Not according to some commodity price inflation fall to determine the bubble economy. Price changes caused by many reasons, the bubble economy is only one of them.
between the economic bubble and the bubble economy, the main difference is: the market mechanism will play a check and balance the economic bubble, the bubble growth rate regardless of speed, the ultimate effect of the market mechanism is always a balance, but the market mechanism of the bubble economy was completely helpless, because in the bubble economy that does not exist in equilibrium.
Third, the economic cycle and the bubble economy
in any economic system, there will be fluctuations in economic operations. In some periods, economic growth has accelerated, there prosperity, in other periods of economic recession, stagnation or recession, a cycle, which is often said that the economic cycle. Periodic fluctuations in macroeconomic and social development of the basic law.
source of cyclical fluctuations generated a social aggregate supply and aggregate demand contradiction and unity of two opposites. Government plans due to market expansion, or expansion, making the social demand and social needs of large industrial production rose led expansion. Because in the modern industry that exists between the various departments in close contact input — output, demand growth was progressively enlarged to form the multiplier. This often shows a sudden jump expansion expansion, leading to large-scale investment peak. Large-scale industrial investment, in turn caused a more dramatic expansion. The economy as if the engine starting up, like, and faster. [3]
in the process of economic development balance between supply and demand is temporary and relative; imbalance is often absolute. Economic development is not balanced state from a non-equilibrium state to another movement. In natural dialectics called “wave-forward” rule. [4] Cycle reflects both supply and demand within the system of self-regulation process of the unity of opposites. Impossible and unnecessary to eliminate fluctuations in the economic cycle. If volatility is too large or the frequency too high will cause a larger economic losses. Economic fluctuations, is not conducive to developing a long-term investment plan, a considerable part of the means of production can not be fully utilized, is not conducive to raising labor productivity and efficiency in the allocation of resources, shortage of many products 1:00, 1:00 backlog of unmarketable, causing serious waste. Volatility in economic and political stability and also affect people's lives, resulting in a series of social problems. Therefore, governments around the world regard the stability of macroeconomic policy as an important goal
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