Analyses point to potentially sizeable costs of sustained inflation, in terms of lost output and diminished consumption opportunities, even when inflation proceeds at moderate rates. This conference articulates the scope of welfare analysis at least in three directions. The first is most established.
Today - with free capital mobility - high level of indebtedness of the government or domestic banks make countries highly vulnerable to changes in investor confidence and may easily lead to sudden capital outflows and a subsequent crisis. Indeed, public debt, foreign indebtedness of banks or even M2 to reserves are all important indicators of crisis vulnerability.