A recent example of this type of shock is the technology boom of the late 1990s in the US, leading to the creation of the so-called ‘new economy’. Some theoretical considerations Supply-side shocks affect production and, therefore, both potential and actual outputs. Consider, first, the effect on potential output.
A well-functioning local-currency bond market allows a government much more economic policy flexibility than can be experienced when tied to foreign currency borrowing.3 And eight well-functioning, modest-sized, local bond markets amount to the same thing as a 'regional market' for most practical purposes.