The 1987 stock market crash
By Scott Sumner
I have a new piece at The Hill discussing the 1987 stock market crash, as well as its implications for today’s economy:
The real lesson of 1987 is that all lessons are provisional, subject to revision as more time goes by and we gain a better understanding of the forces determining asset prices.
What looked in 1987 like a bursting bubble after a period of irrational exuberance, which was likely to trigger a recession, now looks like a period of irrational pessimism, which didn’t slow the economy at all.