This explanation has some attractions but does not seem to fit the overall reality closely. There were not too many explicit guarantees around, leaving aside bank 12  Sachs (1997). BIS Review 22/1998  -6-  and sovereign debt (which remained guaranteed), so there was not a rational reason for re-evaluation.
Finally, the pace of wage increases also may help shed some light on the degree of labor market slack, since wage movements historically have tended to respond to the degree of  2  See Stephanie Aaronson, Tomaz Cajner, Bruce Fallick, Felix Galbis-Reig, Christopher Smith, and William Wascher (2014), “Labor Force Participation: Recent Developments and Future Prospects (PDF),” Brookings Papers on Economic Activity, Fall, pp.