Study On Asset Price Bubbles

Asset price bubbles play an important role in macroeconomic development. Nowadays, Japanese economy has not fully recovered from the 90s' bubble economy of 20th century, the economy of U.S. having strongly developed for 10 years, has stepped into recession after the internet bubble. In fact, if we review the history of capitalism's development, we may find many cases of this. Though no bubble economy has appeared in Chinese economy, bubbles ones became serious in the field of finance and economy in 1992 and in 1993. Reform and Open policy has advanced into finance and gone forward to financial liberation, more and more conflicts and uncertain factors are emerging; to explain this phenomenon's causes and influences has important theoretical value and practical meanings.The explanation of bubbles is ambiguous and receives little attention, people usually think there is no relationship between asset price and macroeconomic. In the first chapter, the article distinguishes asset price bubble and bubble economy, and then depicts the general movement of bubbles. Using asset's intrinsic value and market mechanism, the article provides a new explanation about asset bubble's emerging ,expanding ,stagnation and breaking, analyses the influences on macroeconomic and finance system. At last, combining Chinese bubble's features, the article gives some proposals on avoiding and controlling such phenomena.