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Boombustology, 2nd Edition
book

Boombustology, 2nd Edition

by Vikram Mansharamani
May 2019
Intermediate to advanced content levelIntermediate to advanced
384 pages
10h 21m
English
Wiley
Audiobook available
Content preview from Boombustology, 2nd Edition

CHAPTER 6Tulipomania: A BUBBLE IN SEVENTEENTH-CENTURY HOLLAND

Speculation, it has been noted, comes when popular imagination settles on something seemingly new in the field of commerce or finance. The tulip, beautiful and varied in its colors, was one of the first things so to serve.

—John Kenneth Galbraith

During the 1630s in the Netherlands, a series of events occurred that have been popularized as one of the first recorded financial bubbles. Tulip bulbs escalated in price to the point that particularly rare bulbs traded for sums equivalent to several decades of an average salary.1 More concerning than this rapid rise in the prices of rare bulbs, however, was a similarly rapid—albeit less dramatic—rise in the price of common tulip bulbs for which there were no meaningful supply constraints. Between November 1636 and January 1637, many tulip prices rose by a factor of 10.

After providing a basic overview of tulips and what made them particularly unique in seventeenth-century Holland, the chapter discusses the social, political, and economic context of the times. Finally, the chapter evaluates Tulipomania via the microeconomic, macroeconomic, psychological, political, and biological lenses—illustrating how the multilens approach presented in Part I can be used to evaluate the likelihood of financial bubbles forming and bursting.

The Uniqueness of Tulips

The tulip is not native to Western Europe. The first noteworthy shipment of tulips from the eastern Mediterranean (where ...

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Publisher Resources

ISBN: 9781119575603Purchase book