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The double bubble at the turn of the century: technological roots and structural implications

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  • Carlota Perez
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    Abstract

    This paper argues that the two boom and bust episodes of the turn of the century--the internet mania and crash of the 1990s and the easy liquidity boom and bust of the 2000s--are two distinct components of a single structural phenomenon. They are essentially the equivalent of 1929 developed in two stages, one centred on technological innovation, the other on financial innovation. Hence, the frequent references to that crash, to the 1930s and to Bretton Woods, are not simple journalistic metaphors for interpreting the 'credit crunch' and its solution, but rather the intuitive recognition of a fundamental similarity between those events and the current ones. The paper holds that such major boom and bust episodes are endogenous to the way in which the market economy evolves and assimilates successive technological revolutions. It will discuss why it occurred in two bubbles on this occasion; it examines the differences and continuities between the two episodes and presents an interpretation of their nature and consequences. Copyright The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

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    File URL: http://hdl.handle.net/10.1093/cje/bep028
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    Bibliographic Info

    Article provided by Oxford University Press in its journal Cambridge Journal of Economics.

    Volume (Year): 33 (2009)
    Issue (Month): 4 (July)
    Pages: 779-805

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    Handle: RePEc:oup:cambje:v:33:y:2009:i:4:p:779-805

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    Cited by:
    1. Filippetti, Andrea & Archibugi, Daniele, 2011. "Innovation in times of crisis: National Systems of Innovation, structure, and demand," Research Policy, Elsevier, vol. 40(2), pages 179-192, March.
    2. Alessandro Caiani & Antoine Godin & Stefano Lucarelli, 2012. "Schumpeter in a matrix: a Stock Flow Consistent analysis of technological change," Quaderni di Dipartimento 175, University of Pavia, Department of Economics and Quantitative Methods.
    3. Teodoro Dario Togati, 2012. "How to Explain the Persistence of the Great Recession? A Balanced Stability Approach," Working papers 014, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    4. Jon D. Wisman, 2012. "Wage Stagnation, Rising Inequality and the Financial Crisis of 2008," Working Papers 2012-01, American University, Department of Economics.
    5. Thomas Goda, 2013. "The role of income inequality in crisis theories and in the subprime crisis," Working Papers PKWP1305, Post Keynesian Economics Study Group (PKSG).
    6. Alessandro Caiani & Antoine Godin & Stefano Lucarelli, 2013. "Innovation and Finance: A Stock Flow Consistent Analysis of Great Surges of Development," INET Research Notes 34, Institute for New Economic Thinking (INET).
    7. Archibugi, Daniele & Filippetti, Andrea & Frenz, Marion, 2013. "Economic crisis and innovation: Is destruction prevailing over accumulation?," Research Policy, Elsevier, vol. 42(2), pages 303-314.
    8. Filippetti, Andrea & Archibugi, Daniele, 2010. "Innovation in Times of Crisis: The Uneven Effects of the Economic Downturn across Europe," MPRA Paper 22084, University Library of Munich, Germany.
    9. Frank W. Geels, 2013. "The impact of the financial-economic crisis on sustainability transitions: Financial investment, governance and public discourse," WWWforEurope Working Papers series 39, WWWforEurope.
    10. William Kingston, 2014. "Schumpeter and the end of Western Capitalism," Journal of Evolutionary Economics, Springer, vol. 24(3), pages 449-477, July.
    11. Charles Gore, 2010. "The global recession of 2009 in a long-term development perspective," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(6), pages 714-738.
    12. Luca Andriani & Fabio Sabatini, 2013. "Trust and Prosocial Behaviour in a Process of State Capacity Building: the Case of the Palestinian Territories," Working Papers 6, Birkbeck Centre for Innovation Management Research, revised Oct 2013.
    13. Gisler, Monika & Sornette, Didier & Woodard, Ryan, 2011. "Innovation as a social bubble: The example of the Human Genome Project," Research Policy, Elsevier, vol. 40(10), pages 1412-1425.
    14. Otavio Ribeiro de Medeiros and Vitor Leone, 2012. "Multiple Changes in Persistence vs. Explosive Behaviour: The Dotcom Bubble," Working Papers 2012/02, Nottingham Trent University, Nottingham Business School, Economics Division.

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