Negative Bubbles and Unpredictability of Financial Markets: The Asian Currency Crisis in 1997

Discussion Papers


by KUCHIKI Akifumi

June 2006


We obtain the three following conclusions. First, business cycles depend on prices of stocks and primary commodities such as crude oil. Second, stock prices and oil prices generate psychological cycles with different periods. Third, there exist cases of “negative bubble” under certain conditions. Integrating the above results, we can find a role of a government in financial market in developing countries.

Keywords: cycles, unpredictability, negative bubbles, governments
JEL classification: G18, O16.

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