1. ECON 403 Topics in Macroeconomics Fall 2012 MW 4 – 5:15 pm BEH 108 Instructor: Bernard Malamud Office: Beh 502Phone: 895 – 3294 email: bernard.malamud@unlv.edubernard.malamud@unlv.edu Office Hours: MW 11:30 – 12:30, 2:30 – 3:30 pm and by appointment Course website at: faculty.unlv.edu/bmalamud

2. Tulipmania, 1636 - 1637 Not clear how the bubble was financed/fueled. Land for tulips?

3. Bubbles of Note Mississippi Bubble, 1718-1720 John Law Bank RoyaleCompany of the West (Paper Money)(Mississippi Company) The bubble animated: http://www.youtube.com/watch?v=ADv5-Pen1L4

4. South Sea Bubble Bubble as scam: Insiders bought shares with loans backed by shares Bubble as laughs: http://www.youtube.com/watch?v=QjN8q5rwLoohttp://www.youtube.com/watch?v=QjN8q5rwLoo Observations on our bubble, Richard Koo: http://ineteconomics.org/richard-koo

5. Catalog of Panics, Crises, Collapses: The US Experience 1780s: Post-war reconversion  recession  declining commodity prices  farmers squeezed  tax collections opposed (Shay’s Rebellion)  Constitution adopted to establish federal gov’t credit 1819: War of 1812  Boom and inflation  Tightening by 2 nd Bank -  Crisis: Bank failures/Deflation/Defaults/Unemploymt 1837: 2 nd Bank of US lost charter  State bank inflation of M s  Speculative bubble in land  Bank failures, etc. 1857: Speculation in railroad stocks  Failure of Ohio Life Insur. Co.  Tightening by NY banks  Bank runs Post Civil War: Business cycles driven by spurts and stops of railroad construction in face of generally tight money tied to gold standard.

6. Catalog of Panics, Crises, Collapses: The US Experience The Long Depression, 1873 – 1896 Deflation to return to gold (1865 – 1879) + Budget surpluses to repay Civil War debt (1865 – 1890) + Gold standard discipline after 1879  Tight money + Rapid Economic Growth  Deflation  Expected deflation  Gold Inflows  Rapid Growth  Deflation 1873: Vienna Stock Market Crash  Failure of Jay Cooke & Company  I down  Y down  $ appreciation  Deflation  Nominal wage down but real wage up  Debt burden up 1884: European harvest cycle  Gold In…then…Gold out  US business cycle 1890: Argentine default  Baring Bros. Failure  Intl contagion 1893: Fear of silver  Capital flight from US  Recession 1907: Commodity speculation  Knickerbocker Bank failure  JP Morgan as lender of last resort  Establishment of Fed 1920-21: Post-WWI reconversion + Tight Money (to put labor in its place)  Short, sharp engineered recession