Negative Bubbles: What Happens after a Crash
21 Pages Posted: 7 Mar 2018
Date Written: March 2018
We study crashes using data from 101 global stock markets from 1692 to 2015. Extremely large, annual stock market declines are typically followed by positive returns. This is not true for smaller declines. This pattern does not appear to be driven by institutional frictions, financial crises, macroeconomic shocks, political conflicts, or survivorship issues.
Keywords: global markets, negative bubbles, stock market crash
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