Much of your recent work has been about bubbles in assets and currencies. Can we make any generalisations about the conditions that give rise to such bubbles?
Yes. Most of the bubbles in currencies and assets during the past 40 years have been associated with large and sustained cross-border money flows. The minimum condition for the development of a bubble in a currency is that the rate of growth of the borrowing country’s indebtedness is much higher than the interest rate. The minimum conditio