Book Review: Irrational Exuberance

       Irrational exuberance is written by Nobel Laureate Robert J. Shiller who is currently a professor of economics at Yale University. This book was first published by Princeton University Press in year 2000 which was coincided with the dot com boom period.  It is a business book in which the author tries to transparent the factors that caused the stock market booms in 1800s, 1920’s, 1950s-60s, and late 1990s. Beyond analyzing the factors that caused the stock market booms, the author also offers readers solutions on how to deal with future speculative bubbles. This book is one of the main critiques of efficient market theory. The title of this book was named after Alan Greenspan’s Speech in 1996 regarding the behavior of stock market investors.  It means unsustainable investor enthusiasm that drives asset prices up to levels that are not supported by fundamentals (INVESTOPEDIA, 2014).

After an introduction to stock market historical context, the book was written into five parts. Part one was about the 12 structural factors that influenced the market from 1995-2000.  Shiller had identified 12 factors that are not grounded in sensible economic fundamentals in explaining the surge of stock market during 1990s. Part two of the book emphasized on cultural changes that leverages stock market boom in late 1990s and other speculative booms. Cultural changes was a result of the news media and of new era economic thinking. Part three discussed about the basic psychological factors-psychological anchors for the market and herd behavior that bear on the plausibility of speculative bubbles. Part four of the book examined the arguments against irrational exuberance. In other words, it focuses on the attempts to rationalize exuberance. The last part of the book was about Shiller’s suggestions regarding policy options and action that should be taken to prevent future speculative bubbles. 

An example of an analysis of a research paper

Neuman, W. L., 2014. Social Research Methods: Qualitative and Quantitative Approaches. 7th ed. Essex: Pearson Education Limited. Normaz Wana Ismail, Peter Smith, Maurice Kugler, 2009. The Effect of ASEAN Economic Integration on Foreign Direct Investment. Jstore, 24(3), p. 398.

In this study, they examine how ASEAN Free Trade Area (AFTA) affects foreign direct investment (FDI) flows into ASEAN countries. There are two main types of FDI flows in this study: the flows of intra-regional FDI and the flows of extra-regional FDI. This research finds out that ASEAN new members (Brunet, Myanmar, Vietnam, and Laos) benefit from the increase of intra-regional foreign direct investments, while, ASEAN 5 countries(Thailand, Singapore, Philippines, Indonesia, Malaysia) can attract more investments from Japan and US. Furthermore, this research suggests that there is an increase in investments from ASEAN 5 countries to new members; however, those flows do not appear much within the original ASEAN 5 (Normaz Wana Ismail, Peter Smith, Maurice Kugler, 2009). There are factors that are positively related to foreign direct investment such as market size, income, population, language and distance in sources countries. The researchers have used different kinds of research method in order to come out with the above findings. I am going to discuss the research methods use in this study, and also analyze the strengths and weaknesses of this study below.

Effects of Booyoung Town Project on Cambodia

Abstract: 

Booyoung Company, a Korean conglomerate, has recently invested more than $1.1 billion to build satellite city in Phnom Penh. This investment is the biggest investment ever from Korea to Cambodia. This paper analyzes spillover effects of this investment on Cambodia. I find out that this project brings many positive benefits to Cambodia. 

Author: Mizuno Thay

Senior Banking and Finance Student

Published date: 21 January, 2014

An Analysis of Trade Patterns between Cambodia and Thailand

Abstract: This paper analyzes how the ASEAN Economics Integration in 2015 will affect the trade flows between Cambodia and Thailand based on revealed comparative advantage and intra-industry trade concepts. The major findings of this study are Cambodia and Thailand are likely to further increase their inter-industry trades after the ASEAN Economics Integration, and each country (Cambodia and Thailand) may move to specialize in producing products that it has a comparative advantage. Furthermore, there may not be much adjustment costs associated with the trade liberalization among these two nations since they share a very low IIT.

Author: Mizuno Thay 
Senior Banking and Finance Student

Content:

1. Introduction

2. Comparative advantage analysis

2. 1. Theoretical background

2. 2. Results

2. 3. Discussions

3. Intra-Industry trade analysis

3. 1. Theoretical background

3. 2. Results

3. 3. Discussions

4. Conclusion and recommendations