For a while in the 1990s the expansion of private sector consumption and investment driven by the “new economy” euphoria was partly offset by a tighter budgetary policy, so the effects on domestic balance (overheating) and external balance (current account deficit) were relatively contained (Figure 13).
On the other hand, while fiscal policy turned very expansionary after 2000, it largely offset the sharp increase in corporate net saving as the investment boom ended. Households, which had already turned net borrowers in the late 1990s, ran increasingly larger saving deficits as the housing boom got under way.