In principle, these policy guidelines are just as appropriate for coping with favourable periods as with adverse periods. We will face another test of the macroeconomic framework when the terms-of-trade change is reversed and the gains either fully or partly dissipate. 4  BIS Review 50/2006  Structural policies aimed at maintaining flexibility in labour, capital and goods markets are, however, probably more important than stabilisation policy to sustain both high growth and economic stability in the future. Developments in labour productivity over the last two decades may be an indication of the importance of structural policies. Norway has managed to sustain productivity growth at a high level. Restructuring in the Norwegian economy in the 1990s, changes in the tax system, broader and deeper financial markets, and deregulation in trade and service markets appear to have resulted in a more efficient use of resources. Many of these changes were advocated by Victor Norman in the 1980s and early 1990s. For example, in 1991 he chaired an official committee 5 exploring possible efficiency gains in the government sector. In the report, high possible efficiency gains were envisaged as a consequence of the committee’s proposals, including a better functioning labour market. Victor’s conviction as to what economic policy can accomplish can be illustrated by the following quote from the committee’s report: "We believe that in principle it should be possible to once again reduce unemployment in Norway to one per cent without creating permanent pressures and restructuring problems in the economy." Thank you for your attention!

However, the notion that the economy will grow more swiftly remains a forecast rather than a reality at this point. As is always the case, there is substantial uncertainty surrounding this forecast. Moreover, there is always the possibility of some unforeseen shock. Thus, we will continue to monitor U.S. and global economic conditions very carefully and will adjust our views on the likely path for growth, inflation and the unemployment rate accordingly. Regional economic conditions Let me turn now to the regional economy. A year has passed since Superstorm Sandy devastated the tri-state region. And even today, many of the hardest-hit places are still struggling to recover and rebuild from the storm. In fact, reminders of the storm’s damage remain visible in neighborhoods across Brooklyn, Queens and Staten Island, as well as along the coasts of Long Island and New Jersey. On a more encouraging note, however, the broader regional economy has proven to be remarkably resilient. After a brief dip following the storm, the regional economy quickly rebounded and has continued to add jobs at a reasonably good pace. Moreover, the region’s housing markets have continued to show steady improvement throughout the year. To help monitor the performance of the regional economy more generally, the New York Fed produces economic activity indexes for New York State, New York City and New Jersey. Based on these measures, New York City’s economy has continued to grow strongly throughout the year, and both New York State and New Jersey have seen some pickup in growth in recent months.