High and variable inflation also triggered large wage settlements. This fuelled inflation expectations and contributed to both a wage-price spiral and a wage-wage spiral.3 In the economics literature of the day, there was a lot of confusion over the role that inflation expectations play in the wage-formation process.
The stakes are high—not only because of the economic costs, but because of the social costs and the human suffering caused by financial crises. And, in an increasingly integrated world, more than ever, we are all in this together. 4  BIS Review 31/2002