As I have testified before the Congress many times, I believe, at root, the remarkable generation of capital gains of recent years has resulted from the dramatic fall in inflation expectations and  BIS Review 7/1999  –2–  associated risk premiums, and broad advances in a wide variety of technologies that produced critical synergies in the 1990s.
Capital investment, especially in high-tech equipment, has accelerated dramatically since 1993, presumably reflecting a perception on the part of businesses that the application of these emerging technological synergies would engender a significant increase in rates of return on new investment. Indeed, some calculations support that perception.