Focussing on the role of policies in sustaining this pattern of highly unbalanced growth and on how they reacted to the various shocks – geopolitical, technological and economic – to the global economy, two factors appear to have played a major role.
1 The first was the great increase in US and global liquidity, in part owing to the generally accommodating US monetary policy stance. This accompanied a protracted expansion of consumer spending financed by growing household indebtedness.