It can be purely domestic in nature, or it can be driven by international capital flows. Examples are to be found in the Nordic countries following the liberalisation in the 1980s; in Japan in the 1980s and 1990s; and in the recent experience of a number of East Asian economies. But it is much harder to identify ex ante.
I draw first five conclusions from the foregoing analysis, that will be important for what I want to say in the final part of this lecture, concerning policy challenges. First, the financial industry is unlike other sectors in that the feedback mechanism from supply to price is less effective, or even perverse.