EM bubble formation: capital inflow → asset appreciation → more inflow → overvalued currency + high asset prices. The bubble is recognizable when: current account deficit growing, foreign debt rising, assets priced in USD terms near all-time highs.
EM bubble formation: capital inflow → asset appreciation → more inflow → overvalued currency + high asset prices. The bubble is recognizable when: current account deficit growing, foreign debt rising, assets priced in USD terms near all-time highs.