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Application of logistic models for stock market bubbles analysis

Author

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  • Stasys Girdzijauskas
  • Dalia Štreimikiene

Abstract

The article deals with economic bubbles and analyses their possible causes and tools for the prediction of such bubbles development. An economic bubble is the commonly used term for an economic cycle that is characterized by a rapid expansion followed by a dramatic crash. While some bubbles happen naturally as a part of the economic cycle, some also occur as a result of investor exuberance and serve as correctives. These typically happen in securities, stock markets, real estate and various other business sectors because of certain changes in the way key players conduct business. The well‐known and widely discussed bubbles in asset markets were analysed and compared trying to define the main features, causes and signals of such bubbles creation: Dotcom, Telecom, Health South Corporation, NASDAQ, etc. These bubbles were analysed in the article by applying the logistic growth model allowing to predict the bubbles creation as a result of growth satiation in the conditions of limited resources.

Suggested Citation

  • Stasys Girdzijauskas & Dalia Štreimikiene, 2008. "Application of logistic models for stock market bubbles analysis," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 10(1), pages 45-51, November.
    • Handle: RePEc:taf:jbemgt:v:10:y:2008:i:1:p:45-51
    DOI: 10.3846/1611-1699.2009.10.45-51
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    References listed on IDEAS

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    3. John H. Cochrane, 2002. "Stocks as Money: Convenience Yield and the Tech-Stock Bubble," NBER Working Papers 8987, National Bureau of Economic Research, Inc.
    4. Eugene N. White, 2004. "Bubbles and Busts: The 1990s in the Mirror of the 1920s," FRU Working Papers 2004/09, University of Copenhagen. Department of Economics. Finance Research Unit.
    5. Shone,Ronald, 2001. "An Introduction to Economic Dynamics," Cambridge Books, Cambridge University Press, number 9780521800341, January.
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