This implies that in the long run a sustained improvement in the growth scenario through monetary financing of the deficit could involve a severe trade-off in terms of inflation - every one per cent additional output growth implies nearly 6 to 6.5 per cent rise in inflation rate in the long run. 19.
Obviously, there are some critics of price stability as the dominant objective of monetary policy. For example Prof. Paul Krugman writes ‘.....the belief that absolute price stability is a huge blessing, that it brings large benefits with few if any costs, rests not on evidence but on faith.