Topic: Finance

Quotes

Nicholas Barberis, Robin Greenwood, Lawrence Jin, & Andrei Shleifer, “Extrapolation and bubbles” (2018)

• Nearly all bubbles from tulips to South Sea to the 1929 U.S. stock market to the late 1990s Internet occur on the back of good fundamental news.#

David Beckworth & Josh Hendrickson, “Transaction Asset Shortages” (2018)

• What separates the “resalability” of financial liabilities is the degree of commitment… Financial liabilities with a multilateral commitment are capable of circulating as media of exchange.#
• All financial intermediaries essentially serve the same function in turning illiquid assets into liabilities.#

G.L.S. Shackle, Epistemics and Economics (1972)

• If the price of any durable or storable good is to remain even briefly at rest, it needs to have attained a level which divides the potential holders of this asset into Bulls and Bears of its price. For if all of them suddenly come to think alike, at that moment the price will change abruptly.#

Ronald McKinnon, Money and Capital in Economic Development (1973)

• Without this access [to external finance], the constraint of self-finance sharply biases investment strategy toward marginal variations within the traditional technology.#Quoted in Ross Levine, “Financial Development and Economic Growth: Views and Agenda” (1997)

Walter Bagehot, Lombard Street (1973)

• [England’s financial] organization is so useful because it is so easily adjusted. Political economists say that capital sets towards the most profitable trades, and that it rapidly leaves the less profitable non-paying trades. But in ordinary countries this is a slow process, . . . In England, however, . . . capital runs as surely and instantly where it is most wanted, and where there is most to be made of it, as water runs to find its level.#Quoted in Ross Levine, “Financial Development and Economic Growth: Views and Agenda” (1997)

Ross Levine, “Financial Development and Economic Growth: Views and Agenda” (1997)

• The financial system is a “real” sector: it researches firms and managers, exerts corporate control, and facilitates risk management, exchange, and resource mobilization.#