Can bubble in tire side wall cause vibrations?

Yes, bubble in tyre side wall would cause vibrations especially if it is nearer to the surface of the tyre, and gives it an irregular shape. It can also pose danger at high speeds, since the tyre would be vibrating more vigourously.

Ans 2 - A bubble in the tire side wall means the wall material has separated and the tire will vibrate as it's now out of balance and soft at one point. This is usually a result of going over a sharp bump (curb ) or hitting a sharp edged pothole at excessive speed. - This tire is now effectively ruined !