THE 2012 LAWRENCE R. KLEIN LECTURE: BUBBLES IN PRICES OF EXHAUSTIBLE RESOURCES

Boyan Jovanovic ()

International Economic Review, 2013, vol. 54, issue 1, 1-34

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.

Date: 2013
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