The Instability of Economic Systems and speculative market: The case of China.

Abstract

The paper aims to investigate instability of an economy on the threshold of a financial crisis. We will try to peek on the main variables that seem to "warn" the outbreak of a financial crisis. In fact, the bubble distorts the values of the GDP, which therefore rise. In contrast, the trend in nominal prices remains neutral, because only sensitive to the real economy. This dissonance between the values of growth and inflation can be a useful clue to decipher the formation of a bubble. Therefore, we consider comparing the performance of both GDP and inflation in the years preceding the crisis. After will attempt to determine whether these features are sufficient, at least in part, to provide meaningful messages in a state of emergency being prepared.
In the final part of the essay, we try to apply the search procedure to today's China, which has accumulated profound abnormalities in twenty years of growth boiling. In the experience more or less recent, the formation of a massive speculative bubble is constantly accompanied by a remarkable tendency to deflation of the price system. China is perhaps repeating the experience of Japan and travels to a financial crisis of unexpected violence? We suppose that the shocks of the global economy are transferred to the Chinese giant, which reacts with a slowdown in its endless growth.