The Research On The Evolvment Mechanism Of Asset Price Bubble To Bubble Economy

In the history of human economic development,from the famous tulip bubble,Mississippi bubble,South Sea Bubble in British,bubble economy in Japan and American real estate bubble recently,humans have repeatedly experienced asset price bubble,and encounter the immeasurable consequences of the asset price bubble causing bubble economy to a country.Unfortunately,the problems of asset price bubble are still hovering over every country just as ghost.The reason is that,the scholars neither clearly define the difference between asset price bubble and bubble economy,nor could they explore the conduction mechanism from asset price bubble to bubble economy.so,we still could not find the fundamental method to prevent bubble economy.Based the background of frequent occurrence of asset price bubble to bubble economy,this paper firstly identify the differences between asset price bubble and bubble economy,defining the concept of the bubble economy;Secondly,this paper explore a method of measuring bubble economy,making empirical test on the period of bubble economy in United States;thirdly,we reveal the mechanism evolution from asset price bubble to bubble economy,though building a Dynamic general equilibrium of firms,households and governments.Finally,from preventing the creation excessive asset price bubble as well as the evolution of bubble to bubble economy,we propose the strategies to prevent the bubble economy,with the view of provide references of bubble economy prevention.Firstly,we discriminate the concept of asset price bubble and the bubble economy,finding out the similarities and differences between the two concepts,then,proposing the concept of the bubble economy.Currently,the scholars could not get the uniform definition of asset price bubble and bubble economy,which making those two concepts confusion.That led to the similar research on the connotation of bubble economy,measurement methods and protection policy,and could not provide guidance for the real economy.Thus,in this section,through literature review method,we reveal similarities and differences between asset price bubbles and the bubble economy,meanwhile,put forward the concept of the bubble economy,providing the basis for a later study.Secondly,taking the concept of the bubble economy as basic point,we propose the method to measure the bubble economy,and make empirical test,in this paper,the bubble economy refers to the partial economic bubble from speculative demand,by a certain transmission mechanism,making the effective social demand get over-stimulated,and form the phenomenon of false prosperity.Thus,accounting for the proportion of the increase of consumption and investment by measuring bubbles on total output as the bubble economy measurement,make the empirical study on this method from United States stock market and real estate market data.The results show that the proposed measure of the bubble economy successfully verified the occurrence of the bubble economy in United States,proving the scientific rationality of this method.Thirdly,taking the period of bubble economy in American as the research foundation,by the economic models of homes,manufacturers and government,this paper reveals the mechanism evolution from stock market bubble to bubble economy.The results show that,when the stock price bubble booms,it will affect the household sector consumption through the wealth effect.The study of the mechanism of the wealth effect shows that,when the asset is in a bubble stage,the household sector will increase nominal wealth,and leading to consumption increase by holding bubble assets.The studies on the mechanism of the effect of investment shows that when the asset in the bubble period,through Tobin Q effect,the business sector will consider a small cost of replacement,make the company increase investment;meanwhile,through financial accelerator effects affect investment decisions.The study of mechanism shows that,when asset in bubble period,the net assets increase,leading to more loans to company under the collateral effects,then,stimulating business investment plans.Thereby,the overall economic output increases.As the cycle,the final output is greater than the total output of full-employment,so that a country's economy fell into a bubble economy.Fourthly,this paper proposed strategies to prevent bubble economy by preventing excessive asset price bubble and preventing asset price bubbles to bubble economy,for much generation of asset price bubble,this paper put forward protection policy from expanding investment channels,improving laws and adjusting constitute investor;on the view of the evolution from asset price bubble to bubble economy,this paper proposed protection policy of the bubble economy from preventing household sector excessive consumption and corporate sector overinvestment.