(Two years is a good choice for a benchmark because monetary policy is generally thought to affect inflation with about a twoyear lag.) Right now, although the FOMC has a 2 percent inflation objective over the long run, it has not specified any time frame for achieving that objective.
The detailed comparisons of the 1992 recession with other episodes (figure 7 and figure 8) do not indicate unusual weakness associated with the 1992 recession. Rather, the 1990s in Japan are more notable for the succession of incomplete recoveries than for the recessions themselves (figure 6). 13  To compute these averages, we first centered the path of asset prices around each recession episode.