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The 2002 crash: from “irrational exuberance” to “infectious greed”

Author

Listed:
  • Maryse Farhi

    (Pesquisadora do projeto FAPESP/Instituto de Economia da Unicamp, São Paulo/SP, Brasil - Doutora em Economia pelo Instituto de Economia da Universidade Estadual de Campinas – UNICAMP.)

  • Marcos Antonio Macedo Cintra

    (Pesquisador da Fundação do Desenvolvimento Administrativo do Estado de São Paulo – Fundap, São Paulo/SP, Brasil. - Doutor em Economia pelo Instituto de Economia da Universidade Estadual de Campinas – UNICAMP)

Abstract

This paper is an attempt to discuss the macroeconomic repercussions from deinflating a speculative bubble in stock markets and from an established low price trend. Revelations accrued this low price trend how comprise recommendations by financial analysts, corporation balance sheets, auditing companies and credit rating agencies make the asset pricing difficult, affect confidence by financial agents and contaminate their expectations. The crisis of confidence brought about by these revelations can potentially impact on economic growth of developed countries, beginning with the USA, raise risk aversion by investors and trigger reinforced regulation and supervision mechanisms in detriment to auto-regulating ones which had been prevailing up to the present moment. JEL Classification: F65; G14; G23.

Suggested Citation

  • Maryse Farhi & Marcos Antonio Macedo Cintra, 2003. "The 2002 crash: from “irrational exuberance” to “infectious greed”," Brazilian Journal of Political Economy, Center of Political Economy, vol. 23(1), pages 39-62, January.
    • Handle: RePEc:ekm:repojs:v:23:y:2003:i:1:id:95806
    DOI: 10.1590/0101-31572004-0704
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    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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