In addition, the statistical base on which monetary authorities had to base their assessment of the state of the economy at that time was thin. Examples of tardy exits from monetary accommodation can be found more easily and in more recent times. I will refer to two notable cases. The first case is the “Great Inflation” of the 1970s.
After the recessions following the first oil price shock, the potential output levels were assessed too positively, leading countries to maintain expansionary monetary policy stances for too long. Ultimately, this gave rise to a massive acceleration of inflation. Only a few countries managed to avoid the “Great Inflation”.