My postgraduate
Money and Banking class had to set up a blog on a topic of their choosing. There were many interesting blogs created by
my students, but the top Blogger in the class was Berta Kruminaite, who blogged
about the Dutch tulip mania. The Dutch
tulip mania, which occurred in Amsterdam in 1536-7, saw a dramatic reversal in the
price of tulip bulbs. This mania episode
is traditionally regarded as the first famous 'bubble'. However, over the years, economists have
taken different positions as to whether the Dutch tulip mania really was a ‘bubble’. Berta does a great job of presenting these
different views. She even manages to include
a video clip of Newt Gingrich discussing the tulip mania! You can access Berta’s blog here.
Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne...