For instance, although inflation rates in the United States and Europe have declined compared with a while ago, they are still high, at around 6 percent and around 9 percent, respectively. If inflation rates remain higher than expected, this will increase the degree of monetary tightening required and intensify downward pressure on the economy accordingly.
4  For papers related to capital requirements, see Ian Christensen, Césaire Meh, and Kevin Moran (2011), “Leverage Regulation and Macroeconomic Dynamics (PDF),” August 18; and Enrico Perotti, Lev Ratnovski, and Razvan Vlahu (2011), “Capital Regulation and Tail Risk (PDF),” July.