and is likely to continue to do so over the medium term. figure 9 : rbnz potential output growth estimates through history ( annual growth, august 2016 estimate shown in bold ) % 4. 0 3. 5 3. 0 2. 5 2. 0 1. 5 1. 0 0. 5 source : rbnz estimates. over recent years, most of the increased growth in potential gdp has been due to an increase in labour supply – through greater participation in the labour force and high net immigration. employers, like yourselves, have been able to absorb this additional labour supply over recent years. more people entering the new zealand workforce acts to dampen labour costs, and general inflation as a result. 2 the ability of new zealand businesses to find a productive use for the remarkable increase in the supply of labour is one of the most positive aspects of the current economic expansion. 2 a recent reserve bank speech ( bascand, 2016 ) discusses labour market developments and their influence on inflation in new zealand. more people increase both demand in the economy and growth in potential output. in previous cycles, the increase in demand has often outweighed the contribution to the supply capacity of the economy. migration in previous cycles was therefore usually associated with an increase in overall capacity pressures and inflation, as well as a strong pick up in house price inflation. the consequences of the recent migration inflows on consumer price inflation have been much more modest in this cycle. two key factors can account for this more muted response. first, the composition of migration matters a great deal for inflationary pressures. younger migrants ( 17 - 29 years old ) tend to have a positive but more muted impact on domestic demand compared to older cohorts ( 30 - 49 years old ). 3 second, the source of the migration impulse also matters – higher inward migration to new zealand that is driven by a weaker australian economy tends to result in a higher unemployment rate – all else equal – while inward migration to new zealand driven by other factors has the opposite effect. 4 that is, people who move to new zealand because their job prospects in australia have deteriorated are likely to spend less once here. in recent years, we have seen a larger share of younger migrants than in previous cycles ( figure 10 ), and weakness in the australian labour market has been a driver of trans - tasman flows. vehbi, tugrul ( 2016 ), “ the macroeconomic impact of the age composition of migration ”, rbnz analytical note, an20

vitor constancio : investment and growth in advanced economies selected takeaways from the ecb's sintra forum contribution of mr vitor constancio, vice - president of the european central bank, mr philipp hartmann ( ecb ) and mr peter mcadam ( ecb ) for voxeu, 5 july 2017. * * * the european central bank ’ s 2017 sintra forum on central banking built a bridge from the currently strengthening recovery in europe to longer - term growth issues for and structural change in advanced economies. in this column the organisers highlight some of the main points from the discussions, including what the sources of weak productivity and investment are and what type of economic polarisation tendencies the new growth model seems to be associated with. this year ’ s ecb sintra forum on central banking focused on the major real economy developments that surround and interact with monetary policy. policymakers, academics and market economists debated on the topics of innovation, investment and productivity as well as business cycles, growth and associated policies. in this post we summarise six of the main themes that were keenly discussed in sintra in june 2017 : explaining the global productivity slowdown ; the implications of technical progress for employment ; explaining the laggard postcrisis recovery ; sources of weak investment ; the complementarity between demand and supply policies ; and relevant aspects of the broader societal context. the full set of papers, discussions and speeches can be found on the sintra forum website while video recordings of all sessions are on the ecb ’ s youtube channel. explaining the productivity slowdown : techno - pessimism, fading research effort or mismeasurement? “ perhaps the most remarkable fact about economic growth in recent decades is the slowdown in productivity growth that occurred around the year 2000, ” said chad jones ( 2017 ) in motivating his sintra contribution. this phenomenon, which has affected many advanced economies, has been widely argued for a number of years and may have become more pronounced following the financial crisis ( e. g. oecd 2015, adler et al. 2017 ). jones suggests studying the sources of this slowdown via the two main forces that explain productivity in modern growth theory : innovation and the misallocation of production factors. regarding the latter, jones ( 2017 ) reports key results of the literature that associates the dispersion of marginal products of the same factors across firms in the us and in europe with degrees of misallocation ( e