The global fi nancial crisis, which began as a US sub-prime debt crisis and has subsequently undergone a number of different stages – the latest being the euro area sovereign debt crisis – sharply changed the growth trajectory in the United States and the euro area. A severe recession was followed by a relatively muted recovery and a period of modest growth is expected to follow over the next few years. Consequently, several commentators have compared the current situation in the United States and the euro area with Japan’s so-called “lost decade” in the 1990s. The latter is the most recent episode in which an advanced economy experienced a prolonged adjustment of sectoral balance sheets, persistent weak economic activity, rapidly rising government debt, and a sharp and protracted downward correction in asset prices.