An asset bubble is defined as “trade in high volumes at prices that are considerably at variance with intrinsic values”, i.e. when the prices of assets are over-inflated due to excess demand. It usually occurs when investors all flock to a particular asset class, such as real estate or commodities such as oil. It is a form of inflation that is not always accurately captured in the CPI.
The impact of economic bubbles is debated within and between schools of economic thought; they are not generally considered beneficial, but how harmful their formation and bursting is debated. [1]
