the numbers of the young and the old determine the demand and supply for these assets. 5 the recent history of crisis seems to confirm this line of reasoning. in figure 3, the real land price in japan ( national average, for all purposes ) is juxtaposed with the country ’ s inverse dependency ratio from 1955 to date. this figure shows, firstly, that the relative abundance of young people coincided with sharply higher property prices. secondly, in contrast, the relative abundance of old people seems to be leading to lower property prices. in the united states also, an increasing reverse dependency ratio coincided with the property bubble ( fig. 4 ). after the bubble burst in 2007, property prices seem to have followed the long run movement of the inverse dependency ratio, although it would be premature to draw any conclusions from this at the moment. we see a similar pattern in the irish and spanish experience ( figs. 5 and 6 ). the period is known as the “ great moderation ” in the us case. european central bank ( 2010 ) and basel committee on banking supervision ( 2011 ) provide a concise survey of models with macro - financial linkage proliferating recently in this literature. bianchi ( 2010 ), jeanne and korinek ( 2010a, 2010b ), and stein ( 2011 ) focus on the credit externalities and pave the way for exploring the effects of macro - prudential measures. in particular, bianchi ( 2010 ) and jeanne and korinek ( 2010b ) study financial crises in open economies, aiming to provide macro - prudential remedial measures. however, there is unfortunately relatively little from an asian perspective. exceptions include hattori et al ( 2010 ), and hahm et al ( 2011 ). i take these figures from nishimura ( 2011b ), which contains more figures about other european countries, both core and periphery. empirical evidence suggests strongly that this is the case. see takats ( 2010 ) for property prices, and liu and spiegel ( 2011 ) for equity prices. the economist ( 2011 ) carries a readable account of this issue. bis central bankers ’ speeches i am not suggesting that this demographic factor is the sole cause of the asset bubbles that led to the crisis. there may be other factors, as for example in the case of greece and portugal, who experienced “ bubbles ” in their public sectors rather than in asset prices, but still faced the crisis. likewise, there are

interest rates on loans ; the two monetary aggregates, m2 and m3 ; deposits ; land prices nationwide and in large urban areas ; as well as 3 and 9 year government bond yields. the leading indicators cover mainly balance - sheet information, so that the lagging fcix reflects domestic financial conditions. in the scheme of kamada and nasu, a possible financial crisis is warned of when the leading fcix falls to the zero point. this simple scheme successfully forecast the bnp paribas shock about one year ahead of its occurrence in august 2007. however, this result should be interpreted with caution, since the index fails to take into consideration the uncertainty caused by real - time estimation problems. 15 fig. 10 plots the predicted type - d leading fcix. it forecasts three financial crises successfully, falling to zero in may 1988 ( 19 months before the triple sell - off ), in february 1997 ( 8 months before the bankruptcy of sanyo securities ), and in june 2006 ( 14 months before the bnp paribas shock ). in fig. 10, the predicted leading fcix takes positive values during november 1999 – december 2001, reflecting the it bubble. however, no crisis was observed in japan during this period. to avoid a potential false alert, we have to be able to discern such an “ economic lull ”. the lagging index is useful for this purpose. the lagging index ( not shown here ) indicates that japan remained in a contraction phase during november 1999 – april 2004, suggesting that the revival of the leading index during november 1999 – december 2001 might be indicative of an economic lull. some caveats are in order here. first, although fcixs make it possible to detect signs of impending financial crises, they do not enable one to identify the source, type, or size of the crisis. second, fcixs do not make obvious the optimal policy measures that should be undertaken. with the help of fcixs, policymakers must monitor financial institutions carefully and devise policy measures appropriate for the economic and financial conditions. fcixs are not immune to real - time estimation problems, such as the end - of - sample and lagged - datapublication problems, which may cause serious delay in warning signals. as a solution, kamada and nasu propose to predict the juglar cycle ’ s turning point, where the growth rate falls to zero, by an inflection point, where acceleration falls to zero in real time data