The successful pursuit of the objective of low inflation by central banks in recent decades has also delivered low variability of both inflation and output. At the same time, numerous financial and other "imbalances" (defined here as significant and sustained deviations from historical norms)...

Economic liberalization almost everywhere has constituted a positive supply shock which has been profoundly disinflationary at the global level. Financial liberalization in the industrial countries has also given fuller rein to inherent tendencies towards “procyclicality”, a process of...