Since the mid-1980s, movements in both realized inflation and measures of longer-term inflation expectations have been somewhat muted, complicating the task of extracting the precise role of inflation expectations as a determinant of realized inflation.
For this reason, Rajan argues that the general stimulus to demand that has been provided may not have been the most effective means to restore the economy to full employment, and instead, unlike the neo-Keynesian view, sees the only sustainable solution being to allow the supply side to adjust to more normal and sustainable sources of demand.