An Empirical Analysis of Bubbles in China’s Stock Market

Stock bubble refers to the economic phenomenon that the market price of a stock gets higher than its basic value after continual rises of prices. By means of auto-regressive method and unit root method, the thesis examines the level and nature of bubbles in China’s stock market. The result shows that there has been a long existence of bubble in China’s stock market and that though the level of bubble declined in recent years, it remains at a high level. It also shows that the level of bubble rises with the rises of stock price index.