As we delve deeper into the questions raised by the developments of recent years, the interplay between structural productivity growth and equity premiums, so evident during the past business cycle, is bound to play a prominent role. We need particularly to determine whether the periodic emergence of market bubbles, which have occurred so often in the past, is inevitable going forward.
In this situation, central banks have to choose between the risk of inflation spiralling through expectations and the burden of slowing growth even further by anti-inflation policy measures.