Evidence of Fueling of the 2000 New Economy Bubble by Foreign Capital Inflow: Implications for the Future of the US Economy and its Stock Market
| dc.creator | Sornette, D. | |
| dc.creator | Zhou, W. -X. | |
| dc.date | 2003-06-19 | |
| dc.date.accessioned | 2026-07-07T12:06:47Z | |
| dc.date.available | 2026-07-07T12:06:47Z | |
| dc.description | Previous analyses of a large ensemble of stock markets have demonstrated that a log-periodic power law (LPPL) behavior of the prices constitutes a qualifying signature of speculative bubbles that often land with a crash. We detect such a LPPL signature in the foreign capital inflow during the bubble on the US markets culminating in March 2000. We detect a weak synchronization and lag with the NASDAQ 100 LPPL pattern. We propose to rationalize these observations by the existence of positive feedback loops between market-appreciation / increased-spending / increased-deficit-of-balance-of-payment / larger-foreign-surplus / increased-foreign-capital-inflows and so on. Our analysis suggests that foreign capital inflow have been following rather than causing the bubble. We then combine a macroeconomic analysis of feedback processes occurring between the economy and the stock market with a technical analysis of more than two hundred years of the DJIA to investigate possible scenarios for the future, three years after the end of the bubble and deep into a bearish regime. We also detect a LPPL accelerating bubble on the EURO against the US dollar and the Japanese Yen. In sum, our analyses is in line with our previous work on the LPPL ``anti-bubble'' representing the bearish market that started in 2000. | |
| dc.description | 41 Latex pages including 14 eps figures | |
| dc.identifier | https://arxiv.org/abs/cond-mat/0306496 | |
| dc.identifier | http://arxiv.org/abs/cond-mat/0306496 | |
| dc.identifier | Physica A 332 (2004) 412-440 | |
| dc.identifier | doi:10.1016/j.physa.2003.10.010 | |
| dc.identifier.uri | http://salesiana.dossiersoluciones.com/handle/123456789/208757 | |
| dc.subject | Statistical Mechanics | |
| dc.subject | General Finance | |
| dc.title | Evidence of Fueling of the 2000 New Economy Bubble by Foreign Capital Inflow: Implications for the Future of the US Economy and its Stock Market | |
| dc.type | text |