Burkhauser, Richard V., and Mary C. Daly, 2011, The Declining Work and Welfare of People with Disabilities: What Went Wrong and a Strategy for Change, Washington, DC: AEI Press. Charles, Kerwin Kofi, Erik Hurst and Matthew J. Notowidigdo, 2013, “Manufacturing decline, housing booms, and non-employment,” National Bureau of Economic Research, working paper, No. 18949, April. Consensus Economics, Inc., 1994–2014, “Consensus forecasts: A digest of international economic forecasts,” report, London, April. Daly, Mary C., and Bart Hobijn, 2014, “Downward nominal wage rigidities bend the Phillips curve(external-pdf),” Federal Reserve Bank of San Francisco, working paper, No. 2013–08, January. Dice Hiring Indicators, 2014, “Average job vacancy duration is 25 working days(externalpdf),” release, Chicago, August. Gordon, Robert J., 2013, “The Phillips curve is alive and well: Inflation and the NAIRU during the slow recovery,” National Bureau of Economic Research, working paper, No. 19390, August. Hansen, Lars Peter, and, Thomas J. Sargent, 2014, “Four types of ignorance,” New York University, Department of Economics, working paper, May 18. Hansen, Lars Peter, and, Thomas J. Sargent, 2008, Robustness, Princeton, NJ: Princeton University Press. Kiley, Michael T., 2014, “An evaluation of the inflationary pressure associated with short- and long-term unemployment(external),” Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System, No. 2014–28. Kocherlakota, Narayana, 2013, “A time of testing,” speech, St. Paul Chamber of Commerce, St. Paul, MN, November 12. BIS central bankers’ speeches  9  Krueger, Alan B., Judd Cramer and David Cho, 2014, “Are the long-term unemployed on the margins of the labor market?

Allow me to use the current situation in the UK to illustrate these points. UK output is now in sight of potential, and the capital overhang looks set to be eliminated over the next few years. In order to expand, companies will increasingly need to invest. A strengthening global economy should tempt UK companies to do so, particularly since UK companies are generally competitive given the recent fall in sterling. Indeed, the broad-based global recovery is creating the possibility of a self-reinforcing revival in investment. The Bank of England estimates that more than 80% of the world economy is now growing above potential. Global measures of industrial production and capital goods orders, as well as world trade, have strengthened markedly over the past year, suggesting some rotation in the composition of global demand towards investment. With that more favourable outlook, investment intentions are now rising around the world (Chart 11). If these intentions are realised, the global equilibrium interest rate could rise somewhat, making a given policy setting more accommodative. The extent to which it does will depend on other secular factors that have been holding it down, including demographics, debt overhangs and the capital intensity of production. 10  In this generally constructive environment, the main issues facing UK companies are uncertainties – about how consumers will adjust to a period of weaker real income growth; about market access post-Brexit; about the potential risks in the transition to new arrangements with the EU and the rest of the world.