But comparing peak prices to prices years later does tell you that any ‘abrupt dip’ must have been compensated for by other price increases or maintenance of prices.
I don’t follow. Garber’s data are consistent with the scenario I sketched in the penultimate paragraph of this comment, where I assume away any compensation for the initial dip.
If prices, from the peak, abruptly go down and then abruptly go up, and then follow their usual depreciation curve, that’s not a very bubbly story.
Yeah, Garber’s data are also consistent with an initial rebound.
Sure. It drives me nuts how people constantly bring up Tulipomania.
Fair enough.
I don’t expect a later economist to come along and say ‘everything you thought you knew from Garber is false! yes, the stuff about tulip-breaking virus is false! and tulip bulbs don’t depreciate extremely fast! the futures contracts weren’t canceled! there were no extenuating circumstances like plague!’
Plague? Now that’s something I don’t think he mentions in the papers. (Must...resist...urge to borrow...yet another...book.)
where I assume away any compensation for the initial dip...Garber’s data are also consistent with an initial rebound.
No, you don’t. You bury it in the ‘sank gradually’ part:
But Garber would likely have seen the same thing even if there had been an abrupt bubble pop. Suppose a tulip bulb’s price peaked at 1000 guilders, crashed to 200 guilders within a week, then sank gradually to 100 guilders over the next five years.
You can get an abrupt pop inside an normal-looking beginning/end comparison if something compensates for the pop, like another rise (unlikely) or prices then falling slower than they normally would (‘gradually’). The ground lost in the pop is then made up later.
Plague? Now that’s something I don’t think he mentions in the papers.
His book’s capsule summary of that bit goes
The speculation in common bulbs was a phenomenon lasting one month in the dreary Dutch winter of 1637. A drinking phenomenon held in the taverns, it occurred in the midst of a massive outbreak of bubonic plague and had no real consequence.
It’s the topic of chapter 5, “The Bubonic Plague”.
(Must...resist...urge to borrow...yet another...book.)
No, you don’t. You bury it in the ‘sank gradually’ part: [...] You can get an abrupt pop inside an normal-looking beginning/end comparison if something compensates for the pop, like another rise (unlikely) or prices then falling slower than they normally would (‘gradually’). The ground lost in the pop is then made up later.
Ohh, I see what you’re getting at. I’d interpreted “compensation” more narrowly as something halting or outright reversing the fall in prices, not merely decelerating it.
Yeah, my scenario implies an unusually slow price drop after the initial speedy crash. That wouldn’t surprise me in the wake of the unravelling of a self-fulfilling speculative mania.
It’s the topic of chapter 5, “The Bubonic Plague”. [...] (It’s on Libgen, and isn’t a very long book.)
Good to know, thanks. Added that to my mental things-to-look-at-on-a-rainy-day list.
I don’t follow. Garber’s data are consistent with the scenario I sketched in the penultimate paragraph of this comment, where I assume away any compensation for the initial dip.
Yeah, Garber’s data are also consistent with an initial rebound.
Fair enough.
Plague? Now that’s something I don’t think he mentions in the papers. (Must...resist...urge to borrow...yet another...book.)
No, you don’t. You bury it in the ‘sank gradually’ part:
You can get an abrupt pop inside an normal-looking beginning/end comparison if something compensates for the pop, like another rise (unlikely) or prices then falling slower than they normally would (‘gradually’). The ground lost in the pop is then made up later.
His book’s capsule summary of that bit goes
It’s the topic of chapter 5, “The Bubonic Plague”.
(It’s on Libgen, and isn’t a very long book.)
Ohh, I see what you’re getting at. I’d interpreted “compensation” more narrowly as something halting or outright reversing the fall in prices, not merely decelerating it.
Yeah, my scenario implies an unusually slow price drop after the initial speedy crash. That wouldn’t surprise me in the wake of the unravelling of a self-fulfilling speculative mania.
Good to know, thanks. Added that to my mental things-to-look-at-on-a-rainy-day list.