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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

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Language

EN

File Format

application/pdf

Included in

Economics Commons

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