would, in my view, only delay the return of inflation to 2 percent, provided that inflation expectations remain anchored. unfortunately, the stability of longer - run inflation expectations cannot be taken for granted. during the 1970s, inflation expectations rose markedly because the federal reserve allowed actual inflation to ratchet up persistently in response to economic disruptions – a development that made it more difficult to stabilize both inflation and employment. with considerable effort, however, the fomc gradually succeeded in bringing inflation back down to a low and stable level over the course of the 1980s and early 1990s. since this time, measures of longer - run inflation expectations derived from both surveys and financial markets have been remarkably stable, making it easier to keep actual inflation relatively close to 2 percent despite large movements in oil prices and pronounced swings in the unemployment rate. lately, however, there have been signs that inflation expectations may have drifted down. market - based measures of longer - run inflation compensation have fallen markedly over the past year and half, although they have recently moved up modestly from their all - time lows. similarly, the measure of longer - run inflation expectations reported in the university of michigan survey of consumers has drifted down somewhat over the past few years and now stands at the lower end of the narrow range in which it has fluctuated since the late 1990s. the shifts in these measures notwithstanding, the argument that inflation expectations have actually fallen is far from conclusive. analysis carried out at the fed and elsewhere suggests that the decline in market - based measures of inflation compensation has largely been driven by movements in inflation risk premiums and liquidity concerns rather than by shifts in inflation expectations. 6 in addition, the longer - run measure of inflation expectations from the michigan survey has historically exhibited some sensitivity to fluctuations in current gasoline prices, which suggests that this measure may be an unreliable guide to movements in trend inflation under current circumstances. 7 moreover, measures of longer - run expected inflation gleaned from surveys of business and financial economists, such as those reported in the survey of professional forecasters, the blue chip survey, and the survey of primary dealers, have largely moved sideways in the past year or two. taken together, these results suggest that my baseline assumption of stable expectations is still justified. nevertheless, the decline in some indicators has heightened the risk that this judgment could be wrong. if so, for related background discussions, see bauer and rudebusch ( 2015 ), abrahams and others ( 2012 [ rev. 2015 ), and d ’

mojmir hampl : states as debtors speech by mr mojmir hampl, vice governor of the czech national bank, to the alpbach financial market symposium, alpbach, austria, 2 september 2011. * * * i would like to thank the organizers for inviting me to this wonderful and amazing place. and that is not a platitude ; i really mean it. it is my first time here in alpbach, and i can only hope that it is not the last after i finish my presentation. concerning the sovereign debt crisis, we are describing it as something absolutely fatal. but from a bird ’ s eye view – as was said by several speakers yesterday – sovereign debt problems and overindebtedness of nation states are nothing new. europe as a continent has a rich experience with such problems. the czechs share a long part of their history with austria, so many might remember from their textbooks the sovereign instabilities and crises of the 19th and 20th centuries, for instance the well - known crash of state finances in 1811, in the middle of the wars against napoleon. that crash was followed by a drastic monetary reform, default of the austrian empire and a search for a better way. this time is different, however, at least in the following respects : 1. we forgot that this can happen, that sovereigns can become perfectly insolvent just like any other debtor, and states behaved accordingly. 2. this is the first time in 60 years or so that a sovereign crisis has hit the developed world, the rich world, not the developing one, the hardest. to demonstrate that : almost 80 % of all the imf ’ s rescue loans have gone to europe! over 40 % have gone to the eurozone itself, and the share is going to rise. the developed world is not accustomed to this. 3. this time the problem of sovereign debt has appeared at a time of peace and prosperity. 4. moreover, the eurozone – a monetary union without a state – is a completely new, unprecedented arrangement. typically, the solution to such a crisis used to be : inflation, default or monetary reform, very often accompanied by currency devaluation, or a combination of all these. please note that typically when the imf organizes a programme for a developing country, it requires a partial default or devaluation to disburse funds. nothing like that is possible within the eurozone – monetary solutions are unavailable for the weak