Tech Hype Causes Overinvestment Busts

A macro model shows that waves of product launches plus continuous process improvements can produce sustained investment accumulation even when consumer demand is saturated, leaving the economy fragile to a downturn; applied to the 1920s, this mechanism helps explain the depth of the Great Depression. The paper provides proof‑of‑concept simulations supporting the claim that technological optimism itself can be a macroprudential risk factor. — If true, policymakers should treat technology booms as systemic risk drivers and consider macroprudential tools (capital cushions, investment taxes, disclosure rules) to prevent similar over‑accumulation today.