What is an economic bubble?

Economic bubble is a period of rapidly increasing values ​​for assets that can overcome their actual value. As the market corrects, the bubble bursts and the values ​​collapse. Economic bubbles are usually caused by refugeed speculation. It is often difficult to identify as it happens, and people can only find it after the bubbles rupture and can retrospectively evaluate the value of the assets. If the economic bubble is large enough, it can cause significant problems throughout the economy as a whole. Dutch traders have started trading with tulips for increasingly prizes, especially in very rare specimens. Individual bulbs could be sold many times the annual income of a qualified craftsman until the prices in 1637 threatened extremely fast.

Real estate is often involved in economic bubbles, as well as technology. At the end of the 90. Years around the world inflated and burst in responseEven for trends surrounding technology and real estate. In all cases, investors and speculators involved in bubble inflation believed that the sky was a limit in terms of asset values. This triggered a very aggressive market where assets could significantly increase the value in a single day and the purchase and sale will be mad. When speculative haze was cleaned and prices fell, there were significant losses.

with real estate can be one of the consequences of the economic bubble of the ripple across the financial industry. Since the property loses value, they also attach mortgages and derivative products to it. Landers with large credit portfoli that are rapidly decreasing in value. This in turn can cause panic among investors and account holders and can cause problems to spread throughout the economy. With less money available for lending due to losses, the credit market can also dry out, and this makes it difficult to stimulate the economy into recovery.

processes for creating economic bubbles are topicsEm studies and intense interest. Economists want to be able to predict them and find them as they occur. They can use different tools to filter out the noise signal in terms of price fluctuations and investors' behavior. They can help distinguish the economic bubble from the actual increase in value, but are not quite reliable.