New evidence on the first financial bubble
The Mississippi Bubble, South Sea Bubble and the Dutch Windhandel of 1720 together represent the world's first global financial bubble. We hand-collect cross-sectional price data and investor account data from 1720 to test theories about market bubbles. Our tests suggest that innovation was a key driver of bubble expectations. We present evidence against the currently prevailing debt-for-equity conversion hypothesis and relate stock returns to innovations in Atlantic trade and insurance. We find evidence consistent with the innovation-driven bubble dynamics documented by Pastor and Veronesi (2009) for new economy stocks. Our evidence seems inconsistent with clientele-based theories that emphasize bubble-riding and short-sales restrictions.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 108 (2013)
Issue (Month): 3 ()
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/inca/505576|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Peter Temin & Joachim Voth, 2004.
"Riding the South Sea bubble,"
Economics Working Papers
861, Department of Economics and Business, Universitat Pompeu Fabra.
- Peter Temin & Hans-Joachim Voth, 2003. "Riding the South Sea Bubble," Working Papers 91, Barcelona Graduate School of Economics.
- Peter Temin & Hans-Joachim Voth, 2004. "Riding the South See Bubble," Working Papers 213, Barcelona Graduate School of Economics.
- Temin, Peter & Voth, Hans-Joachim, 2004. "Riding the South Sea Bubble," CEPR Discussion Papers 4221, C.E.P.R. Discussion Papers.
- Carlos, Ann M. & Moyen, Nathalie & Hill, Jonathan, 2002. "Royal African Company Share Prices during the South Sea Bubble," Explorations in Economic History, Elsevier, vol. 39(1), pages 61-87, January.
- Pietro Veronesi & Lubos Pastor, 2005.
"Was There a Nasdaq Bubble in the Late 1990s?,"
2005 Meeting Papers
95, Society for Economic Dynamics.
- Pástor, Luboš & Veronesi, Pietro, 2004. "Was There A Nasdaq Bubble in the Late 1990s?," CEPR Discussion Papers 4485, C.E.P.R. Discussion Papers.
- Lubos Pastor & Pietro Veronesi, 2004. "Was There a Nasdaq Bubble in the Late 1990s?," NBER Working Papers 10581, National Bureau of Economic Research, Inc.
- John M. Griffin & Jeffrey H. Harris & Tao Shu & Selim Topaloglu, 2011. "Who Drove and Burst the Tech Bubble?," Journal of Finance, American Finance Association, vol. 66(4), pages 1251-1290, 08.
- Schwert, G.W., 1989.
"Stock Volatility And The Crash Of '87,"
89-01, Rochester, Business - General.
- Dilip Abreu & Markus K. Brunnermeier, 2003.
"Bubbles and Crashes,"
Econometric Society, vol. 71(1), pages 173-204, January.
- Lubos Pastor & Pietro Veronesi, 2005.
"Technological Revolutions and Stock Prices,"
NBER Working Papers
11876, National Bureau of Economic Research, Inc.
- Christine Macleod, 1986. "The 1690s Patents Boom: Invention or Stock-Jobbing?," Economic History Review, Economic History Society, vol. 39(4), pages 549-571, November.
- Thorpe, David P. & Holland, Burt, 2000. "Some multiple comparison procedures for variances from non-normal populations," Computational Statistics & Data Analysis, Elsevier, vol. 35(2), pages 171-199, December.
- Gary S. Shea, 2007. "Financial market analysis can go mad (in the search for irrational behaviour during the South Sea Bubble) -super-1," Economic History Review, Economic History Society, vol. 60(4), pages 742-765, November.
- Gary S. Shea, 2005. "Financial Market Analysis Can Go Mad (in the search for irrational behaviour during the South Sea Bubble)," CDMA Working Paper Series 200508, Centre for Dynamic Macroeconomic Analysis.
- Ann Carlos & Karen Maguire & Larry Neal, 2006. "Financial acumen, women speculators, and the Royal African company during the South Sea bubble," Accounting History Review, Taylor & Francis Journals, vol. 16(2), pages 219-243.
- Eli Ofek & Matthew Richardson, 2003. "DotCom Mania: The Rise and Fall of Internet Stock Prices," Journal of Finance, American Finance Association, vol. 58(3), pages 1113-1138, 06.
- Harris, Ron, 1994. "The Bubble Act: Its Passage and Its Effects on Business Organization," The Journal of Economic History, Cambridge University Press, vol. 54(03), pages 610-627, September.
- Bart Hobijn & Boyan Jovanovic, 2001.
"The Information-Technology Revolution and the Stock Market: Evidence,"
American Economic Review,
American Economic Association, vol. 91(5), pages 1203-1220, December.
- Bart Hobijn & Boyan Jovanovic, 2000. "The Information Technology Revolution and the Stock Market: Evidence," NBER Working Papers 7684, National Bureau of Economic Research, Inc.
- Tom Nicholas, 2008. "Does Innovation Cause Stock Market Runups? Evidence from the Great Crash," American Economic Review, American Economic Association, vol. 98(4), pages 1370-1396, September.
- Kingston, Christopher, 2007. "Marine Insurance in Britain and America, 1720 1844: A Comparative Institutional Analysis," The Journal of Economic History, Cambridge University Press, vol. 67(02), pages 379-409, June.
- Markus K. Brunnermeier & Stefan Nagel, 2004. "Hedge Funds and the Technology Bubble," Journal of Finance, American Finance Association, vol. 59(5), pages 2013-2040, October.
When requesting a correction, please mention this item's handle: RePEc:eee:jfinec:v:108:y:2013:i:3:p:585-607. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.