I’ve been interested in asset price bubbles for a long time, and anyone who has done time researching or talking about them is familiar with the Dutch Tulipmania, the South Sea bubble, and the Dutch East India bubble. The first two were written about by Charles Mackay in his Extraordinary Popular and the Madness of Crowds.
Well sir, I just found out that those may not have been bubbles at all:http://faculty.chicagobooth.edu/john.cochrane/research/papers/cochrane_garber_review_JPE.pdf
The article is a review of the book The Fundamentals of Early Manias by Peter Garber (2001). I haven’t read the book yet, but if the review is to be believed, Garber’s work does a lot of damage to the bubble story (but does not destroy it competely).
Very interesting point: apparently the early tales of “bubbles” were false, written by moralists trying to get the Dutch government to shut down speculation generally. Sounds sensible to me!