Research On China Stock Market Bubble Effect Based On Chaos Theory

The stock market becomes more and more important in the economic development of the modern society, as the core part of the capital market. In the operation of the stock market, the bubbles appear inevitably. The bubbles have an effect on the stock market in the shape of "production-growth-expansion-breakdown". Whatever Bull Market in 2007 or unprecedented Bear Market in 2008 is the masterpiece of the bubbles in China Stock Market. The bubbles produce enormous impaction on the macro economy through the stock market.Because China Stock Market is an open, complex nonlinear system which is made up by so many different elements, the essay grasps the bubbles hidden behind the stock market to seek the rule and the orderliness in the complex changing progress. First, according to the different shapes of the bubbles in China Stock Market, the essay finds out that the characteristics of the stock market bubbles is a double-edges sword from the analysis of the positive and negative bubble effects. The bubbles would motivate the listed-company financing, optimize the allocation of resources and promote the economic development; otherwise would bring stock market crisis and even cause economic crisis. Secondly, the essay divides the bubbles into three forms of mild, warm and overheating ones and establishes the Logistic chaotic economic model to research the bubbles in China Stock Market and dominate them in the OGY chaos control method. Finally, the essay makes different suggestions to control them in a reasonable range so as to promote the steady development of macroeconomic. Meanwhile the essay points out the major mission in controlling the bubbles of our stock market based on the present situation of China Stock Market.