Asset Bubbles in Shipping? An Analysis of Recent History in the Drybulk Market

The purpose of this paper is to investigate the hypothesis that the freight market boom in the drybulk freight market between 2003 and 2005 caused asset values in the second-hand market to deviate from underlying fundamentals. We test the instantaneous equilibrium relationship between the markets for second-hand ships, newbuildings and freight in a Vector Error Correction Model (VECM) framework. We also estimate and account for the time-varying delivery lag in the newbuilding market. Our empirical results suggest that the second-hand market was closely cointegrated with the fundamental freight and newbuilding market with no evidence of a short-term asset ‘bubble’.

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    • Copyright © 2006 Macmillan Publishers Ltd. The contents of this paper reflect the views of the author[s] and do not necessarily reflect the official views or policies of the Transportation Research Board or the National Academy of Sciences.
  • Authors:
    • Adland, Roar
    • Jia, Haiying
    • Strandenes, Siri
  • Publication Date: 2006-9


  • English

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  • Accession Number: 01606303
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jun 27 2016 11:16AM