Introduction

Abstract

Following the seminal work of Tinbergen (1931, 1934) and Koopmans (1939) research in maritime economics has focused on integrating the various markets into a dynamic system. This macroeconomic or systems approach to maritime economics reached its heyday with the Beenstock-Vergottis (BV) model (1993). The BV model is the first systematic approach to explain the interaction of the freight, time charter, secondhand, newbuilding and scrap markets under the twin assumptions of rational expectations and market efficiency. The model is a landmark because it treats ships as assets and applies portfolio theory to assess their values. As asset prices depend on expectations, Beenstock and Vergottis introduce rational expectations to account for the impact of expected and unexpected changes in key exogenous variables, such as the demand for shipping services, interest rates and bunker costs.