element in the ongoing deliberations of both economists and jurists. of particular current relevance to our economy overall is the application of property right protection to information technology. a noticeable component of the surge in the trend growth of the economy in recent years arguably reflects the benefits that we have derived from the synergy of laser and fiber optic technologies in the 1960s and 1970s. this synergy has produced very little that is tangible in information technology. yet the information flow that it facilitates has fostered the creation of vast amounts of wealth. the dramatic gains in information technology have markedly improved the ability of businesses to identify and address incipient economic imbalances before they inflict significant damage. these gains reflect new advances in both the physical and the conceptual realms. it is imperative to find the appropriate intellectual property regime for each. * * * if our objective is to maximize economic growth, are we striking the right balance in our protection of intellectual property rights? are the protections sufficiently broad to encourage innovation but not so broad as to shut down follow - on innovation? are such protections so vague that they produce uncertainties that raise risk premiums and the cost of capital? how appropriate is our current system - developed for a world in which physical assets predominated - for an economy in which value increasingly is embodied in ideas rather than tangible capital? the importance of such questions is perhaps most readily appreciated here in silicon valley. rationalizing the differences between intellectual property rights as defined and enforced in the united states and those of our trading partners has emerged as a seminal issue in our trade negotiations. if the form of protection afforded to intellectual property rights affects economic growth, it must do so by increasing the underlying pace of output per labor hour, our measure of productivity growth. ideas are at the center of productivity growth. multifactor productivity by definition attempts to capture product innovations and insights in the way that capital and labor are organized to produce output. ideas are also embodied directly in the capital that we employ. in essence, the growth of productivity attributable to factors other than indigenous natural resources and labor skill, is largely a measure of the contribution of ideas to economic growth and to our standards of living. understanding the interplay of ideas and economic growth should be an area of active economic analysis, which for so many generations has focused mainly on physical things. this work will not be easy. even as straightforward an issue as isolating the effect of the length of patents on overall economic growth, a prominent issue recently before our

, “ why is involuntary part - time work elevated? “ feds notes ( washington : board of governors of the federal reserve system, april 14 ). bis central bankers ’ speeches tightness in the labor market. here too, however, the signal is not entirely clear, as other factors such as longer - run trends in productivity growth also generally influence the growth of compensation. key measures of hourly labor compensation rose at an annual rate of only around 2 percent through most of the recovery. more recently, however, some tentative hints of a pickup in the pace of wage gains may indicate that the objective of full employment is coming closer into view. recent inflation developments while the labor market has moved closer to the fomc ’ s mandated goal of maximum employment, less progress has been made in moving inflation close to the fomc ’ s longerrun objective of 2 percent, which the committee considers to be consistent with our mandated goal of price stability. overall consumer price inflation has been close to zero over the past year, in large part because the big drop in crude oil prices since last summer has pushed down prices for gasoline and other consumer energy products. price inflation excluding the volatile categories of energy and food prices, or so - called core inflation, is often a better indicator of future overall inflation. but it too is running below our 2 percent objective and has been over most of the recovery. the recent low level of core inflation - 1. 2 percent over the past 12 months - partly reflects the appreciation of the foreign exchange value of the u. s. dollar during the second half of last year, as global financial markets seemed to judge that our economy was relatively stronger than those of many of our trading partners. the stronger dollar has pushed down the prices of imported goods, and that, in turn, has put downward pressure on core inflation. in addition, the plunge in oil prices may have had some indirect effects in holding down the prices of non - energy items in core inflation, as producers passed on to their customers some of the cost savings from lower energy prices. in all, however, these downward pressures seem to be abating, and the effects of these transitory factors are expected to fall out of measures of inflation by early next year. very low inflation may not sound like a real problem to many people. however, persistently low price inflation, which can tend to slow the pace of wage increases over time, can weaken the economy by, for example, making it more difficult for households and firms