EL HADAOUI Driss

1)

A bubble is an economic cycle has a characteristic a fast increase of asset prices followed by
shrinking.
We should care because the bubble is difficult to be identified before- the fact. However, it is easy to
identify after.

2)

A bubble is a question of market inefficiency, which means that the financial market can’t determine
the optimal prices of assets. It’s when the market has wrong determination of prices.

3)

The role of government:

- Exercising of a good monetary policy

- Exercising of regulatory policiy