*  *  *  The recent financial turmoil has highlighted once again that the role of financial imbalances is a major challenge for central banks focusing on price stability. Most of the analyses of the causes of the financial turbulence that I have read stress the role of new financial developments, which make this event special.
But the recent crisis is just one of a series of episodes over the past 30 years when the paths of asset prices – most notably equities and housing – were a highly distorting factor that ex post turned out to have disruptive macroeconomic effects.