We introduce the concept of “negative bubbles” as the mirror image of standard financial bubbles, in which positive … feedback mechanisms may lead to transient accelerating price falls. To model these negative bubbles, we adapt the Johansen …-Ledoit-Sornette (JLS) model of rational expectation bubbles with a hazard rate describing the collective buying pressure of noise traders …

We propose an extension of the class of rational expectations bubbles (REBs) to the more general rational beliefs … beliefs can thus account for speculative bubbles, without the need for irrational agents or limits to arbitrage. Many of the … shortcomings of REBs that make rational bubbles implausible can be overcome once we relax the ergodicity requirement. In particular …

fundamental cause of the unfolding financial and economic crisis: the accumulation of several bubbles and their interplay and …

fundamental cause of the unfolding financial and economic crisis: the accumulation of several bubbles and their interplay and …

. Moreover, processes of this type can be used to model financial bubbles in stock prices as deviation from the fundamental value …