What are Asset Price Bubbles? A Survey on Definitions of Financial Bubbles

Anja Janischewski and Michael Heinrich Baumann
Additional contact information
Anja Janischewski: Faculty of Economics and Business Administration, Chemnitz University of Technology, Germany
Michael Heinrich Baumann: Department of Mathematics, University of Bayreuth, Germany

No 65, Chemnitz Economic Papers from Department of Economics, Chemnitz University of Technology

Abstract: Financial bubbles and crashes have repeatedly caused economic turmoil notably but not only during the 2008 financial crisis. However, both in the popular press as well as scientific publications, the meaning of bubble is sometimes unspecified. Due to the multitude of bubble definitions, we conduct a systematic review with the following questions: What definitions of asset price bubbles exist in the literature? Which definitions are used in which disciplines and how frequently? We develop a system of definition categories and categorize a total of 122 papers from eleven research areas. Our results show that although one definition is indeed prevalent in the literature, the overall definition landscape is not uniform. Next to the mostly used definition as deviation from a present value of expected future cash flows, we identify several other definitions, which rely on price properties or other specifications of a fundamental value. This research contributes by shedding light on the possible variations in which bubbles are defined and operationalized.

Keywords: asset price bubble; fad; financial crisis; local martingale; fundamental analysis (search for similar items in EconPapers)
Pages: 39 pages
Date: 2025-02
References: Add references at CitEc
Citations:

Published in Chemnitz Economic Papers, February 2025, pages 1-39

Downloads: (external link)
https://www.tu-chemnitz.de/wirtschaft/vwl1/RePEc/download/tch/wpaper/CEP065.pdf First version, 2025 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tch:wpaper:cep065

Access Statistics for this paper

More papers in Chemnitz Economic Papers from Department of Economics, Chemnitz University of Technology Contact information at EDIRC.
Bibliographic data for series maintained by Marlene Richter.