Diagnosis and Prediction of IIGPS’ Countries Bubble Crashes During BREXIT

Mathematics, 9, 9, 1003, https://doi.org/10.3390/math9091003

16 Pages Posted: 4 May 2021

See all articles by Bikramaditya Ghosh

Bikramaditya Ghosh

SIBM-B

Spyros Papathanasiou

National and Kapodistrian University of Athens

Nikita Ramchandani

Christ University

Dimitris Kenourgios

National and Kapodistrian University of Athens - Department of Economics

Date Written: April 29, 2021

Abstract

We herein employ an alternative approach to model the financial bubbles prior to crashes and fit a log-periodic power law (LPPL) to IIGPS countries (Italy, Ireland, Greece, Portugal, and Spain) during Brexit. These countries represent the five financially troubled economies of the Eurozone that have suffered the most during the Brexit referendum. It was found that all 77 crashes across the five IIGPS nations from 19 January 2015 until 17 February 2020 strictly fol-lowed a log-periodic power law or other LPPL signature. They all had a speculative bubble phase (following the power law growth) that was then followed by a sudden crash immedi-ately after reaching a critical point. Furthermore, their pattern coefficients were similar as well. This study would surely assist policymakers around the Eurozone to predict future crashes with the help of these parameters.

Keywords: financial bubbles; market crashes; log-periodic power law; IIGPS’ countrie

JEL Classification: G10;G15

Suggested Citation

Ghosh, Bikramaditya and Papathanasiou, Spyros and Ramchandani, Nikita and Kenourgios, Dimitris, Diagnosis and Prediction of IIGPS’ Countries Bubble Crashes During BREXIT (April 29, 2021). Mathematics, 9, 9, 1003, https://doi.org/10.3390/math9091003, Available at SSRN: https://ssrn.com/abstract=3836488

Bikramaditya Ghosh

SIBM-B ( email )

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Spyros Papathanasiou (Contact Author)

National and Kapodistrian University of Athens ( email )

1, Sofokleous Str.
Athens, 10559
Greece

Nikita Ramchandani

Christ University ( email )

India

Dimitris Kenourgios

National and Kapodistrian University of Athens - Department of Economics ( email )

1, Sofokleous Str
Office 521
Athens, 10559
Greece
+30 210 3689449 (Phone)

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