Journal Article

Bubble, toil, and trouble

Abstract: When people call the dot-com boom a bubble, they imply that investors based their decisions on something other than a good estimate of the future value of the assets theywere buying. But some economists say that is not likely because episodes like the dot-com bust show future value is not always easy to predict, especially when the asset is a new technology. This Commentary shows how both explanations can describe a famous historical bubble that occurred after the introduction of a technology that was new at the beginning of the eighteenth century?a novel macroeconomic theory.

Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Economic Commentary

Publication Date: 2003

Issue: Oct

Order Number: 2