Determining the Ebullient Phases in EFTA Stock Markets

Authors

  • Irfan Ullah Khan University of Mianwali, Pakistan. Author
  • Mumtaz Ahmed COMSATS University Islamabad, Pakistan. Author
  • Shakeel Ahmed HITEC University, Taxila, Pakistan. Author
  • Usman Shaukat Khan COMSATS University Islamabad, Pakistan. Author

DOI:

https://doi.org/10.62345/jads.2024.13.2.43

Keywords:

Periodically Collapsing Bubbles, Generalized Supremum ADF, Explosivity

Abstract

Previous empirical literature supports the idea that stock bubbles have impacts on the efficient allocation of wealth. Researchers targeted various economies in the past using various methods to explore the bubble phenomenon. This study uses the generalized SADF test, which is admitted by empirical literature to be the most successful technique, to explore stock bubbles in three countries included in the European Free Trade Association (EFTA) that have not been studied before. This paper takes the lead and tests for the existence of bubbles in the monthly end index prices of respective countries based on the latest available time series data from January 2001 to September 2019. Based on empirical results, it is concluded that the stock markets of all three countries experienced multiple bubbles during the study period. The case of Iceland is worse, where comparatively more fluctuations in stock prices are seen. To avoid the occurrence of further stock price bubbles in these countries, policy recommendations are provided as well.

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Author Biographies

  • Irfan Ullah Khan, University of Mianwali, Pakistan.

    Department of Business Administration, University of Mianwali, Pakistan. Email: irfanullah429@yahoo.com

  • Mumtaz Ahmed, COMSATS University Islamabad, Pakistan.

    Department of Economics, COMSATS University Islamabad, Pakistan. Email: mumtaz.ahmed@comsats.edu.pk

  • Shakeel Ahmed, HITEC University, Taxila, Pakistan.

    Department of Management Sciences, HITEC University, Taxila, Pakistan. Email: shakeel.ahmed@hitecuni.edu.pk

  • Usman Shaukat Khan, COMSATS University Islamabad, Pakistan.

    Department of Management Sciences, COMSATS University Islamabad, Pakistan.
    Email: usmanshaukatkhan@gmail.com

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Published

2024-05-28

How to Cite

Determining the Ebullient Phases in EFTA Stock Markets. (2024). Journal of Asian Development Studies, 13(2), 525-536. https://doi.org/10.62345/jads.2024.13.2.43

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