is replete with confounding factors that make parsing difficult. 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. and while one may quibble with bits and pieces, their argument that policymakers should accept that disinflation is likely to be costly is well reasoned. the authors ’ second takeaway from history is that state dependencies or nonlinearities are also in play. the state dependency they note is that a higher initial inflation rate is associated with a lower sacrifice ratio. to explain this finding, they advance an argument based on policy credibility. specifically, they argue that a high initial inflation rate enhances the plausibility of central banks ’ willingness to incur the cost of reducing inflation. that strikes me as plausible on its face, but there are other stories that may also apply. in the interest of brevity, let me point out just one. central bankers are constantly warning of combatting inflationary shocks before those forces become embedded in inflation expectations. 2 the volcker disinflation of 1981 – 82 they draw this conclusion by replicating some of the methodology from the literature on sacrifice ratios. see, for example, ball ( 1994 ) and tetlow ( 2022 ) and references therein. for example, chair powell, in testimony before the u. s. senate, said, “ we will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched ” ( powell, 2022a ). this reasoning has a lengthy history, as evidenced by remarks in 2008 by then vice chair of the board of governors of the federal reserve system donald kohn : “ as demonstrated by historical experiences around the world and in the united states during the 1970s and 1980s, efforts to bring inflation and inflation expectations back to desirable levels after they have risen appreciably involve costly and undesirable changes in resource utilization ” ( kohn, 2008 ). and the sentiment is shared internationally, as remarks by bank of canada governor tiff macklem attest : “ if we don ’ t do enough [ policy tightening ], canadians will continue to endure the hardship of high inflation. and they will come to expect persistently high inflation, which will require much higher interest

rates and, potentially, a severe recession to control inflation. nobody wants that ” ( macklem, 2022 ). - 3resulted in a painful recession. but the reduction in inflation was large. thus, measured in terms of percentage points of inflation reduction, as is conventionally done, it was not particularly costly. 3 a plausible, if partial, explanation for this finding is that the volcker disinflation was carried out before the inflation associated with the second opec oil price shock had become entrenched in inflation expectations and more generally at a time when inflation expectations were fluid. 4 this is relevant as my colleagues on the fomc and i strive to bring down actual inflation promptly in order to preserve the “ well anchored ” longer - term inflation expectations we see in the data. it is also consistent with the authors ’ argument that swift and relatively painless disinflations of the past were due to early and sharp policy interest rate increases. the authors ’ third takeaway from history is that easing monetary policy before the disinflation is complete, or easing by too much, is costly. 5 my reading of this claim is that while central bankers might entertain hopes that they will directly see a dividend from early, forceful policy actions, historical experience suggests that they should not count on such a favorable outcome. and, finally, they argue that policy needs to look ahead and act preemptively. while the authors do not present evidence to support this claim, it is an argument with which policymakers nearly always agree, in principle, but find difficult to execute, in practice. as i ’ ll discuss in a minute, choosing the appropriate stance of monetary policy, converting the unemployment sacrifice ratio in ball ( 1994 ) into output space using an okun coefficient of two renders an output sacrifice ratio of just 1. 8, a small number by historical standards. for a summary of sacrifice ratios in history, see tetlow ( 2022 ) and cecchetti and others ( 2023 ). this may be related to the authors ’ second conjecture on why initially high levels of inflation are associated with lower sacrifice ratios — namely, that high inflation is associated with large global supply shocks ( cecchetti and others, 2023, p. 18 ). it is analytically distinct, however, in that they do not emphasize the timely monetary policy response to those shocks. this point is elaborated upon in chair powell ’ s 2022 jackson hole speech ;