Kindleberger Cycles: Method in the madness of crowds?

Randall Morck

No 28411, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Corporate R&D has a social return far above its internal rate of return to the innovating corporation, and so is chronically underfunded from a social perspective. Kindleberger cycles, irregularly recurring stock market manias, panics, and crashes, 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.

JEL-codes: G01 G02 G4 N2 O16 O3 O33 O4 P1 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-fdg and nep-his
Note: CF
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Citations: View citations in EconPapers (2)

Published as Randall Morck, 2022. "Kindleberger Cycles: Method in the Madness of Crowds?," Annual Review of Financial Economics, vol 14(1).

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