As a result, financial flows ran from countries with strong productivity growth to countries with weak productivity growth, fuelling a persistent economic boom based on the accumulation of debt. To be efficient, financial flows should instead have run towards countries with higher levels of productivity growth.
If contrary to expectations, the central bank is committed to keeping inflation under control, it may then be forced to raise interest rates substantially to  2  For example, Bruno and Easterly (1995) suggest 40 percent as a danger point, beyond which increases in inflation are very likely to lead to a growth crisis.