A policy focused on price and economic stability over the medium run and that responds symmetrically to inflationary and deflationary shocks can nonetheless contribute to excessive leverage, risk-taking, and maturity transformation, and indeed that appears to have happened; to some extent, we were the victims of our own success.
Improved monetary policy after the 1970s, along with a host of other factors, including technological advances and greater global integration of capital and product markets, helped reduce the size and frequency of fluctuations in output and lower inflation.