The short run tradeoff works because economic actors can be surprised by unexpected loosening, and the surprise can have positive growth effects. In the long run, the central bank loses its power to surprise, and the public embeds its correct forecast of how much inflation the central bank will create into all nominal variables such as interest rates.
These led to a wide adoption of inflation targeting and probably more important for a number of countries, to the end of fiscal dominance;  –  Consciousness about the relevance of fiscal discipline and the preservation of public debt sustainability;  –  Deeper trade liberalization;  –  Keeping up to speed in financial sector supervision and regulation, which has produced well-capitalized banking systems.