What is ‘Echo Bubble’
A post-bubble rally that becomes another, smaller bubble. The echo bubble usually occurs in the sector in which the preceding bubble was most prominent, but the echo is less dramatic.
Explaining ‘Echo Bubble’
People point to the rally that occurred after the market crash of 1929 as an example of an echo bubble. Just like its more prominent predecessor, the smaller echo bubble eventually burst. Also, after the technology bubble that occurred at the turn of the 21st century – one of the biggest bubbles of all time – people believed that another echo bubble was on the way.
Further Reading
- Bubbles: Some perspectives (and loose talk) from history – academic.oup.com [PDF]
- Echoes of Veblen's – www.tandfonline.com [PDF]
- Financial bubbles: mechanisms and diagnostics – papers.ssrn.com [PDF]
- Laws against bubbles: An experimental-asset-market approach to analyzing financial regulation – heinonline.org [PDF]
- Echo epidemics: Control frauds generate white-collar street crime waves – heinonline.org [PDF]
