Bubbles in prices of exhaustible resources

Boyan Jovanovic

    Research output: Contribution to journalArticlepeer-review


    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.

    Original languageEnglish (US)
    Pages (from-to)1-34
    Number of pages34
    JournalInternational Economic Review
    Issue number1
    StatePublished - Feb 2013

    ASJC Scopus subject areas

    • Economics and Econometrics


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