The improved inflation performance has come not at the expense of, but in conjunction with, output stability. Researchers have documented the so-called Great Moderation, in which the U.S. economy has achieved a marked reduction in the volatility of both real gross domestic product and core inflation over the past twenty years or so.
Most economists would probably attribute at least some portion of the Great Moderation in the growth of real output to monetary policy. Despite the record of steadier economic performance, bouts of financial market instability continue to arise. Indeed, in my judgment, the inexorable march of technological change and creative destruction in a market economy all but assures the occurrence of such episodes (Schumpeter, 1942).