ABSTRACT
The most direct approach to dealing with the pernicious effects of asset price bubbles is to prevent bubbles from occurring or mitigate the severity of asset mispricings if they do occur. Indeed, policymakers and scholars have long implemented or proposed various regulations designed to dampen bubbles or otherwise combat “excessive speculation.” In recent years, examples of actual or proposed anti-bubble laws included the following:
• In May 2007, the Chinese government imposed a tax on securities transactions to curb speculation in stocks as fears rose that the Chinese stock market was in a bubble.1 This action followed in the wake of a long line of economic scholarship advocating for transaction taxes to remedy excessive speculation.2
