The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Speculative Bubbles

  • Miguel A. Iraola
  • Manuel S. Santos
Reference work entry


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.


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 

JEL Classifications

D4 D10 E44 G12 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

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