Kindleberger Cycles: Method in the Madness of Crowds?

Randall Morck ()
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Randall Morck: Alberta School of Business, University of Alberta, Edmonton, Canada

Annual Review of Financial Economics, 2022, vol. 14, issue 1, 563-585

Abstract: Corporate R&D has a social return far above its internal rate of return to the innovating corporation, and so it is chronically underfunded from a social perspective. Kindleberger cycles, irregularly recurring stock market manias, panics, and crashes that are prominent in financial history, are also a major problem for mainstream economics. If manias inundating hot new technologies with capital sufficiently counter chronic underinvestment in innovation, economy-level selection may favor institutions and behavioral norms conducive to Kindleberger cycles despite individual agents’ losses in panics and crashes.

Keywords: behavioral finance; evolutionary economics; government failure; growth-enhancing bubbles; intellectual property rights; investment manias; market failure; productivity growth; R&D spillovers (search for similar items in EconPapers)
JEL-codes: G01 G02 G4 N2 O16 O3 O33 O4 P1 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1146/annurev-financial-101821-115140

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