Document Type
Article
Abstract
Speculative economic bubbles are a common phenomenon but are not wholly understood. Bubbles progress through a series of nine stages. A shock triggers a profitable redistribution of assets, credit creation and new investments; speculation fuels the economy; doubts burst the bubble. The Mississippi Bubble, in early 18th century France, presents an example to which this model may be applied. The history of the Mississippi Bubble, and a brief IS-LM analysis, show that speculative bubbles can be like a lively party: loud and boisterous, but with a mess to clean up afterwards. The French economy was left with a national hangover which stunted business activity and scarred the communal psyche. The model of speculative bubbles applies well to the Mississippi Bubble.
Publication Date
Spring 2002
Journal Title
Major Themes in Economics
Volume
4
Issue
1
First Page
71
Last Page
94
Copyright
©2002 by Major Themes in Economics
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Language
en
File Format
application/pdf
Recommended Citation
Knight, Alex
(2002)
"A Bubble on the Mighty Mississippi: An Application of a General Model of Speculative Bubbles to the Mississippi Bubble of 1716-1720,"
Major Themes in Economics, 4, 71-94.
Available at:
https://scholarworks.uni.edu/mtie/vol4/iss1/6