Bubbles in Prices of Exhaustible Resources
AbstractAside from the equilibrium that Hotelling (1931) displayed, his model of non-renewable resources also contains a continuum of bubble equilibria. In all the equilibria the price of the resource rises at the rate of interest. In a bubble equilibrium, however, the consumption of the resource peters out, and a positive fraction of the original stock continues to trade forever. And that may well be happening in the market for high-end Bordeaux wines.
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Date of creation: Aug 2007
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Other versions of this item:
- Boyan Jovanovic, 2008. "Bubbles in Prices of Exhaustible Resources," 2008 Meeting Papers 26, Society for Economic Dynamics.
- Boyan Jovanovic, 2007. "Bubbles in Prices of Exhaustible Resources," Levine's Working Paper Archive 122247000000001414, David K. Levine.
- Jovanovic, Boyan, 2008. "Bubbles In Prices Of Exhaustible Resources," Working Papers 45830, American Association of Wine Economists.
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-08-27 (All new papers)
- NEP-ENV-2007-08-27 (Environmental Economics)
- NEP-MAC-2007-08-27 (Macroeconomics)
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