Academics from Queen’s Management School have today (Thursday 6 August) released a new book, 'Boom and Bust: A Global History of Financial Bubbles', exploring why stock and housing markets sometimes experience amazing booms followed by massive busts.
Professor John Turner and Dr William Quinn explore a history of bubbles including Paris and London in 1720, Latin America in the 1820s, Melbourne in the 1880s, New York in the 1920s, Tokyo in the 1980s, Silicon Valley in the 1990s, Belfast and Dublin in the 2000s, and Shanghai in the 2000s.
The publication helps us understand why bubbles happen, and why some have catastrophic economic, social and political consequences whilst others have actually benefitted society.
Professor John Turner, Professor of Finance and Financial History at Queen's Management School said: “2020 is the tricentenary of the first financial bubbles - the Mississippi and South Sea Bubbles, the 30th anniversary of the Japanese bubble and the 20th anniversary of the dotcom bubble. In our book we examine the great bubbles of the past 300 years to understand why they happen.”
Talking about what we can learn from financial bubbles Dr William Quinn, Lecturer in Finance at Queen's Management School, commented: “The main lesson of our book is that bubbles are usually engineered by politicians. This makes bubbles difficult to predict. And when banks get embroiled in bubbles, the consequences for society can be catastrophic.”
The book reveals that bubbles start when investors and speculators react to new technology or political initiatives, showing that our ability to predict future bubbles will ultimately come down to being able to predict these sparks. It also shines a light on the role of central banks and governments in dealing with the aftermath of bubbles.
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