by Phillip Soos and Paul D. Egan
In Bubble Economics, Paul D. Egan and Philip Soos explore a depressed Australia in the 1840s, 1890s and 1930s. They detail recurrent patterns of boom-bust credit and asset cycles which heralded financial instability, particularly following speculation in commercial and residential land markets.
A financial instability model is put forward to predict economic downturns which is based on Georgist, post-Keynesian and behavioural finance schools of economic thought, informed by data from 1830 to 2013.
The trends in Australia’s current trade settings, residential property market and banking sector are ominously similar to the key precursors to Australia’s ‘Great Depression’ of the 1890s. Egan and Soos expose ‘rentier economics’ in the land down under and discard the dominant neoclassical paradigm, bringing a fresh perspective to the intense debate about Australia’s economic future.