ABSTRACTSome features of the present recession must attract attention: acceleration of inflation in 1989–90, sharp deterioration of expectations in summer 1992, persistence of high real interest rates, lack of inter‐country correlation between the fiscal stance and the increase in unemployment. These features do not damage the main framework used in the past decades for macroeconomic policy analysis, but they emphasize the importance of a better understanding of the formation and role of expectations, of the dynamics of debt deflation, of the presence and evolution of major disequilibria in the structure of relative prices and remuneration ra