After all, a loss in confidence can be completely rational: Illiquidity forces issuers to sell assets into distressed markets. So, I argue, the functioning of short-term credit markets is invariably tied to changes in confidence of our financial architecture – on the way up and on the way down. The arc of this narrative, thus, necessarily began some years ago.
These factors include supply shocks, labor market structure, economic conditions at the start of the disinflationary episode, how “well anchored” are inflation expectations, and the speed at which a disinflation is carried out. Even so, the authors are thorough in what they do.