mario draghi : unemployment in the euro area speech by mr mario draghi, president of the european central bank, at the federal reserve bank of kansas city economic symposium, jackson hole, wyoming, 22 august 2014. * * * summary everyone in society is affected by high unemployment. for central banks it is at the heart of the macro dynamics that determine inflation, and even when there are no risks to price stability it increases pressure on us to act. the key issue, however, is how much we can really sustainably affect unemployment, which depends on whether the drivers are predominantly cyclical or structural. in the euro area, unemployment has been caused by a large and particularly sustained negative shock to gdp : first through the great recession, which affected all advanced economies, and second, through sovereign debt crisis, where job losses were concentrated in countries affected by financial stress. the sovereign debt crisis operated in part by disabling the tools of macroeconomic stabilisation, as fiscal policy had to switch towards convincing investors of debt sustainability, and monetary policy transmission became disrupted. cyclical factors have therefore played an important role in the rise in unemployment, and the weak economic situation in the euro area suggests they continue to do so. at the same time, there is evidence that a significant share of unemployment is also structural. this is suggested by patterns of long - term unemployment and skill mismatches. making firm conclusions about the degree of structural unemployment in the euro area, however, is complicated by uncertainty over estimation methods. there is also considerable heterogeneity across countries in terms of initial conditions, and in the way that demand shocks interact with labour market institutions. in these circumstances, the only conclusion that policymakers can safely draw is that we need action on both sides of the economy : aggregate demand policies have to be accompanied by national structural policies. demand side policies are not only justified by the significant cyclical component in unemployment. they are also relevant because, given prevailing uncertainty, the risks of “ doing too little ” – i. e. that cyclical unemployment becomes structural – outweigh those of “ doing too much ” – that is, excessive upward wage and price pressures. at the same time, aggregate demand policies will ultimately not be effective without action on the supply side. advanced economies are operating in a set of initial conditions which include low inflation, low interest rates and a large debt overhang. in this context, structural policies are needed to engineer higher potential growth and allow both fiscal and monetary policy

stefan ingves : introduction to monetary policy speech by mr stefan ingves, governor of the sveriges riksbank, at the riksdag committee on finance, stockholm, 26 october 2006. diagrams for the speech can be found on the sveriges riksbank ’ s website http : / / www. riksbank. com. * * * thank you for the invitation to come here! this is my second hearing at the riksdag committee on finance to discuss monetary policy. i thus cannot claim that i have very much experience of these hearings. however, this also applies to some of you who are here for the first time, and i am convinced that it will not present any obstacles to an interesting and rewarding discussion. it is often a good idea to begin with a backward glance to gain some perspective for the current situation, and this time, with so many new members, it may be particularly useful. after the look back, i shall look forward and describe the riksbank ’ s views regarding the economic outlook and monetary policy. during the backward glance i shall assert that the new regime introduced around a decade and a half ago has worked well. we have had an entirely different stability in the development of the economy than before, and at the same time growth has been relatively high. my most important message when looking ahead is that the prospects for the swedish economy are also bright. we see ahead of us continued good growth in the economy over the coming years and a continued improvement in the labour market. at the same time, the rise in inflation is expected to be moderate, but this requires among other things a gradual increase in the interest rate. a look further back … it is now almost one and a half decades since we in sweden were forced to abandon the fixed exchange rate. this was the starting point for the changeover in economic policy that led to both monetary policy and fiscal policy taking on different roles than they had in the 1970s and 1980s. fiscal policy had previously often been overly expansionary and contributed to excessively high inflation. it was now given the main task of ensuring that public finances developed in a way that was sustainable in the long term. monetary policy, on the other hand, was no longer tied to defending the exchange rate in that the krona was allowed to float. its main task was instead to more directly maintain inflation at a low and stable level, by using interest rate changes to affect demand in the economy. the new regime has lived