Do We Have a New Economy?
16 Pages Posted: 31 Jul 2005
In this speech, Sushil B Wadhwani, argues that the US and UK economies are 'new' in that structural changes have led to a breakdown of some of the historical relationships that help inform the setting of monetary policy. Evidence is presented suggesting that the equilibrium rate of unemployment has fallen in both countries, and that the underlying rate of productivity growth has risen in the United States. Dr Wadhwani also argues that an intensification of product market competition and mis-measurement of capacity utilisation might help to explain why conventional price equations have tended to overestimate inflationary pressure.
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