Berg: Monetary policy and statistics in the new economy

‘Most things indicate that elements in the so-called new economy are now contributing to a relationship between growth and inflation in Sweden that is more favourable than was the case in the 1970s and ’80s. IT usage, for example, is higher than in many other countries in Europe and on a par with or above the level in the United States. We are also in the lead as regards IT investment,’ Claes Berg, head of the Riksbank’s Monetary Policy Department, said today at a seminar arranged by the Ministry of Justice.

 

‘It is also evident that increased elements of the new economy are affecting both demand and supply in our economy,’ Mr. Berg continued. ‘To the extent that an increased use of information technology has improved potential growth, it will contribute to the possibility of higher growth without jeopardising the inflation target. But both capital formation and total consumption are influenced by profit expectations and share prices for firms in the new economy. So demand may grow faster than supply, which could motivate a tighter monetary stance in order to prevent an increase in inflation.

 

‘The advances in information technology have been accompanied by positive effects that a variety of structural changes have exerted on inflation and the workings of the economy; examples are the adoption of an inflation target, the deregulation of markets and Sweden’s membership of the European Union. That makes it difficult to separate the causes of the changes we are seeing in the economic statistics,’ Mr. Berg said. ‘That is one reason why the Riksbank and Statistics Sweden have initiated collaboration in a number of fields to do, for example, with the measurement and analysis of productivity in connection with growing elements of the new economy.

 

‘Statistics Sweden will be making a closer analysis of the possibilities of producing statistics on IT investment in hardware and software for computer systems and telecom equipment. A thorough study of productivity will also be made at the micro level of the statistical material.

 

‘The cooperation between Statistics Sweden and the Riksbank will also involve improvements in the measurement of producer prices.

 

‘As regards the time lag before statistics are published, we have found that the EU countries are well behind the United States. In this context the Riksbank is commissioning a preliminary study of the possibilities of speeding up the publication of the quarterly national accounts. The Riksbank is also commissioning an analysis of differences in the way productivity is measured in Sweden compared with the United States,’ Mr. Berg concluded.