Since the introduction of inflation targeting, the Norwegian economy has been exposed to a number of major shocks, most of which have originated beyond Norway’s borders. In responding to these shocks, flexibility and scope for judgement in the conduct of monetary policy have been significant strengths. Inflation has generally been low and stable since the beginning of the 1990s and has remained so throughout the period of inflation targeting. At the same time, monetary policy has contributed to dampening fluctuations in the real economy.5 As long as inflation is firmly anchored, monetary policy can address other concerns. We can seek to counteract the build-up of financial imbalances by keeping the interest rate a little higher than would otherwise be the case. But Norges Bank cannot take the main responsibility for developments in house prices and debt. Nor can monetary policy influence the economy’s longterm growth capacity. The past couple of years have been demanding for the Norwegian economy. Monetary policy can be supportive, but cannot take primary responsibility for needed structural adjustments. The shift towards a less oil-driven economy lies ahead. Conclusion The original task of meteorologists was to forecast the weather so that ships could find shelter and property could be secured before the storm hit. Today, climatologists give advice on how we can curb global warming. When economists take the temperature of the economy, they do so in order to forecast its future path. This exercise provides insight that helps the business sector adapt and facilitates the conduct of economic policy.

Better health, less heavy work and in many countries a social safety net are also among the gains. Chart: Global warming Nor does it capture all of the costs. Our economic progress has taken its toll on our most important public good: the natural environment. The greatest environmental challenge is of a global nature. With ever higher concentrations of greenhouse gases in the atmosphere, the planet’s average temperature has risen. This has serious, long-term implications both for meteorological conditions and for society. The research field the “Bergen School” helped pave the way for has now gained fresh relevance. Greenhouse gas emissions have increased primarily due to human activity. Irrespective of their source, emissions all have an equal weight in global carbon accounting. Action and innovation to combat climate change are therefore necessary in multiple sectors and across countries. The pricing of emissions is crucial for achieving future emissions targets. The polluter must pay. Firms and consumers will then find it profitable to choose more eco-friendly production methods and products. If everyone also faces the same emissions costs, the reductions that cost the least will be made first. Departing from this principle will increase the costs of mitigating global warming. The pricing of emissions also boosts demand for new and more eco-friendly technology, making it more profitable to invest in research and development of new solutions and products. These must stem from choices made by the individual firm and the individual consumer. The development of new technology to combat global warming is advancing too slowly.