Examples of indicators in this category are numerous, but clearly encompass models of credit booms as well as various estimates of valuation in real estate markets. 22 Both such sets of indicators can provide indications of buildup of imbalances but suffer from one drawback. Assumptions need to be made about what defines excessive developments.
“The euro will not work”, some press and intelligentsia told us in the early 1990s. “We already warned you: the euro is in crisis”, they now tell us, not without some Schadenfreude.