The Problem of Financial Bubble Determination in the Market in the Context of Modern Monetary Policy

Abstract :

an early identification of financial bubble in the market is extremely crucial as it allows investors to reduce their potential losses and authorities to prepare for a possible recession in the economy. The last large bubble burst occurred in 2007 (the US mortgage crisis), but today the economic system is still not immune to such damage. Most central banks, primarily in the USA, Europe and Japan, execute an ultra-loose monetary policy and will support financial markets in case of collapse. In this regard, some traditional methods for determination of a price bubble es and search for better indicators. This paper is presented a classification of various indicators of financial bubble determination with their advantages and disadvantages and the most representative indicators are selected.