The New Economy: Myths and Realities - speech by Sushil Wadhwani

In his Travers Lecture at the London Guildhall University today, Dr Sushil Wadhwani argues it is possible that measurement issues have led forecasters to overestimate inflationary pressures in the UK economy in recent years.
Published on 20 March 2001

Dr Wadhwani says that, for example, alternative assumptions about the measurement of investment in computers and software might, on some preliminary estimates, increase measured productivity growth by as much as 0.4 percentage points per annum. Importantly, some preliminary work suggests that these alternative data might have lowered the equilibrium rate of unemployment in the Bank of England’s Medium-Term Macroeconometric Model (MTMM) by about 0.5 percentage points in 1999, which, if interpreted mechanically, would have lowered estimates of inflationary pressure.

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