Moreover, as theory suggested would be the case, once wage- and price-setting behaviour adjusted to the new, low, level of inflation, employment and output both recovered quite quickly, with unemployment declining from almost 11 per cent in 1991 to 6 per cent in 1996.
In other words, the increase in unemployment was a result of the process of reducing inflation from a high level to a low level, not a result of maintaining inflation at a low level.