Great Moderation
Name for the mid-1980s–2007 stretch of lower inflation and output volatility in the United States—later reassessed after the financial crisis.
Economists credited better monetary policy, inventory management, financial innovation, and good luck. Confidence grew that major downturns were tamed—perhaps encouraging leverage and risk underestimation.
The Great Recession challenged narratives of permanent stability and reopened questions about regulation and household debt.
Link to expectations
Rational-expectations and monetarist themes intertwine with stories about anchored inflation—until shocks proved models incomplete.