The structural changes are three in nature; one real, one monetary and one financial. The first change has profoundly affected the real global economy. Liberalization of product and factor markets, allied with technological developments, has increased output in many countries and particularly so in the previously centrally planned economies. These developments have aided central bankers everywhere in their attempts to reduce inflation and to keep it low. The second major change has in fact been the growing, global commitment to this objective after the Great Inflation of the 1970s. The third major structural change, again reflecting both deregulation and technology, has been the growing completeness and integration of world financial markets. While the efficiency gains associated with such developments are not in question, it could also be contended that they pose a particular challenge to central bankers, and not only during the transition period to a more liberalized regime.…
