Description
Book SynopsisThe role of the stock market in the recent global financial crisis has led many to question the way in which the modern international financial system operates. This highly topical book offers important insights into the stock market, contrasting the speculative explanation of stock market fluctuations with the conventional efficient markets hypothesis.
After summarising economists' views on stock market behavior from the classical period to the present day, the authors focus on two particular explanations of stock price fluctuations. They examine in detail the mainstream neo-classical theory with its emphasis on the efficient markets hypothesis. They then compare this with the theories of Veblen, Galbraith and Keynes who consider markets as being inherently prone to speculation and crisis, in contrast to the neo-classical approach which largely ignores the instability of stock markets and particularly the crashes that have recently occurred. The authors go on to develop a speculative model to account for stock market fluctuations which provides a useful and realistic explanation of how stock price expectations are formed.
This book will be welcomed by bankers, financial and monetary economists, historians of economic thought and all those interested in the causes of the recent market crashes.
Trade Review'This book provides a welcome and sobering counterpoint to the increasingly popular view that stocks are the safest asset for the long run investor, by demonstrating the challenge to the dominant rational markets paradigm that is posed by behavioral and speculative theories of asset markets.' -- Michael J. Brennan, University of California, Los Angeles, US
Table of ContentsContents: Preface The New Bull: Will the Market still Fluctuate? 1. Introduction: Economists On (and In) the Stock Market 2. The Stock Market: Structure, Performance and Character 3. Neo-classical Economists on Rational Markets and Speculation 4. Stock Markets in Veblen’s Theory of Business Enterprise 5. Keynes on Speculative Stock Markets 6. Galbraith’s Model of Speculative Stock Markets 7. Recent Developments in Speculative Markets Theory: Fads, Fashions and ‘Rational’ Bubbles 8. Current Prospects for Speculative Markets Theory Bibliography Index
