Professor Philip Lane:

I think that is a really important part of what went on. That is one consequence of the decline in the labour share. One of the puzzles since the late 1990s is that profits have been relatively high but firms have not invested so much. Increasingly firms sit on a great deal of cash. Like the Asian sovereigns, the corporations typically do not want to take on investment risk. They put the cash on deposit or they buy short-term net products.

So it is another source of cash looking for safety and, in turn, driving down the risk-free rate and encouraging the search for yield. On the other side of that is the fact that labour incomes in many countries were stagnating. I am less familiar with studies that have been carried out in Europe. In the US, however, the high increase in household debt was, at least in part, being driven by the stagnation of wages. That definitely is a part of what went on.