Bubbles in Prices of Exhaustible Resources

34 Pages Posted: 24 Jan 2013

See all articles by Boyan Jovanovic

Boyan Jovanovic

New York University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 2013

Abstract

This article proposes a test for the presence of a bubble in the price of an exhaustible resource. A bubble is accompanied by a rise in the storage‐to‐consumption ratio: Consumption peters out, and a fraction of the original stock is held forever. The test suggests there is a bubble in the price of oil and in the market for high‐end Bordeaux wines, but other explanations are also possible. A bubble reduces welfare regardless of whether there are other stores of value, particularly fiat money.

Suggested Citation

Jovanovic, Boyan, Bubbles in Prices of Exhaustible Resources (February 2013). International Economic Review, Vol. 54, Issue 1, pp. 1-34, 2013, Available at SSRN: https://ssrn.com/abstract=2206126 or http://dx.doi.org/10.1111/iere.12000

Boyan Jovanovic (Contact Author)

New York University - Department of Economics ( email )

19 w 4 st.
New York, NY 10012
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2
Abstract Views
891
PlumX Metrics