Otherwise, a hard landing may be unavoidable, despite the best efforts of policymakers. The upside of a hard landing is that it contributes to reversing imbalances and, afterwards, allows policymakers to aim once again at achieving a healthy, sustainable expansion, ultimately combining full employment, maximum sustainable growth, and price stability. It is useful to distinguish two broad classes of hard landings.
The first involves the reversal of an imbalance between aggregate supply and aggregate demand. The classic example is the boom-bust scenario. The second class involves the unwinding of sector or market imbalances that either initiate a downturn in the economy or aggravate a downturn that would otherwise have occurred. A classic example of this genre is a stock market correction.