These effects are reinforced by the fact that the National Accounts are based on the calculation assumption that there is no productivity increase in the public sector at all. During the second half of the 1990s in particular, there was a rapid development in information technology, which entailed greater efficiency in knowledge transfer between individuals and companies and between companies. The expansion of the IT sector was one of the corner-stones of this "new economy". The effect this actually had on productivity has been much discussed. It is clear that the IT sector itself, and in particular the telecom industry, was responsible for a significant part of productivity growth at the end of the 1990s. Developments were very uneven among the different industries, with the increase in productivity in "IT user" industries being much less impressive, despite large investments in IT products, than that in the "IT producer" sector. The latter is also clearly illustrated when the productivity increase in trade and industry is adjusted for the increase that took place in the telecom industry (Figure 5). When this sector is excluded, productivity during the second half of the 1990s increased by only 1.9 per cent a year, compared with 2.8 per cent if the sector is included. The telecom sector has now greatly declined in importance and there is apparent confusion over its future development. The important question for the Riksbank is what all of this entails for the development of long-term productivity growth in future.

In addition and as a crucial complement to its operational responsibilities, the Markets Group has responsibility for monitoring and analyzing financial markets. These activities serve to support existing operations and provide vital knowledge as new types of operations are contemplated. They also supply an important source of unique market intelligence for policymakers on developments in an array of financial markets that could affect the economy or have policy implications. These efforts tend to focus on understanding broad financial market conditions, expectations for monetary policy and the real economy, and financial stability risks. My use of the phrase “market monitoring” is intended to capture much more than following prices and trading activity in asset markets and conversing with market participants globally about the causes behind market developments, as important as that is. It includes broader responsibility for analyzing both immediate and longer-term trends in global financial markets and linkages among financial institutions, and it rests upon a deep understanding of the microstructure of financial instruments and markets and of the motivations of market participants.2 By maintaining deep expertise in particular asset classes and detailed knowledge of market behavior and infrastructure, the Desk is able to structure and execute operations to achieve the objectives of policymakers. This deep expertise also enhances the quality of the information and staff assessments about current market developments that is communicated to policymakers throughout the Federal Reserve System through a variety of briefings, conversations and written products.