bonds after an experimental phase in the late 1980s ; that, too, is worth recalling as the old idea of a tobin tax is being revived in some quarters. improvements in productivity and flexibility national accounts data from statistics sweden suggest that our economy is now capable of growing faster than in recent decades. it looks as though the higher productivity growth is not only attributable to rising activity. in the period from 1974 to 1993, for example, productivity growth averaged less than 1. 5 % a year, while since 1994 the average rate has been almost 2 %. this is what lies behind the common, though not yet entirely certain, estimate that the potential rate of gdp growth is now between 2 and 2. 5 %. at the same time it should be noted that there are still no clear signs of an accelerating rate of productivity growth such as we have seen in the united states. i say this even though i believe that one cause of the difference between the united states and europe in this respect has to do with how the statistics are obtained. such a process could conceivably come about in the swedish economy, too, but i suggest we wait until that happens before incorporating it in our expectations and policy decisions. our economy is developing favourably enough as it is. given certain assumptions, there are, in principle, two ways in which labour productivity can be increased. firstly, the growth rate of total factor productivity can rise. total factor productivity seems to have been on an upward trend since 1993, which implies a successive improvement in production technology. that in turn may mean that information technology, for example, has been gradually increasing its contribution to output. secondly, labour productivity can be affected by changes in capital intensity. a rising input of capital equipment per employee, for instance, means that each person can produce more. historically, increased capital intensity has often been a characteristic of periods when the growth of labour productivity was notably high. during the present upswing, however, capital intensity has been more or less constant. so, at least to date, this mechanism cannot account for our increased productivity growth. it is not the case that business investment has been sluggish. on the contrary, investment growth, excluding the real estate sector, has been higher than for a long time. but as employment has risen equally strongly, capital intensity has been unchanged so far. but it would not be surprising if investment growth, and thereby growth of the capital stock, were to accelerate as the labour market becomes more and more

that there is a neutral arena in which the parties can meet outside formal negotiations. the outcome for wage earners has also been better in terms of higher real wage increases. virtually no real wage increases took place during the 1970s and 1980s. the wage increases agreed upon in the wage bargaining rounds of 2007 were too high the two most recent wage bargaining rounds have taken place under widely - differing circumstances. the wage bargaining rounds in 2007 took place at the crest of an economic boom, when the economic prospects were also strong for the following years, while the wage bargaining rounds in 2010 took place during a financial crisis and a deep recession. the wage bargaining rounds for 2007 did not work well from an economic perspective. the agreed wages were too high. i myself was quite optimistic ahead of the negotiations. my assessment was that they could be carried out in good order and could result in wage increases in line with the riksbank ’ s inflation target. but the result of the wage bargaining rounds was surprisingly negative. the centrally - agreed wage increases for the agreement period 2007 to 2009 were almost 3 per cent per year, which is almost one percentage point higher than during the previous agreement period. inflation increased and the riksbank successively raised the repo rate from 3 per cent at the start of 2007 to 4. 75 per cent in september 2008. in addition, the financial crisis led the economic conditions to change radically during the agreement period. during the autumn of 2008, it became obvious that the financial crisis would also hit the swedish economy hard. the riksbank and other authorities made comprehensive efforts to prevent the swedish banks from being dragged into the crisis. and, to alleviate the consequences of the crisis, the riksbank rapidly lowered the repo rate to 0. 25 per cent in july 2009. even so, developments became clearly worse than expected. during 2009, gdp showed the greatest fall since the second world war, while unemployment rose to almost 9 per cent at the end of 2009. this reaffirmed the conclusion that wage increases had been too high. on average, wages increased by 3. 7 per cent during the years 2007 to 2009. the wages agreed for 2010 contributed towards preventing the crisis from being so deep in sweden in many ways, the wage bargaining rounds in 2010 were the direct opposite of the wage bargaining rounds in 2007. developments were marked by the financial crisis, which resulted in low wage agreements which were largely in line with the riksbank ’ s forecasts. the crisis also meant that the common