Arvind Subramanian has a nice piece at Project Syndicate about lessons for economists from the Euro crisis. One lesson which he highlights is that Germany has in some ways benefited from the crisis. First, as the safe haven in the euro-zone, their borrowing costs are really low. Second, because their currency is hitched to their southern neighbours, they have a weaker currency than they if they had retained the Deutschemark. But are the Germans willing to make the fiscal transfers necessary to keep the euro-zone going?
My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here . This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors.
