has followed a more favourable trend than expected, thereby reducing the risk of bottlenecks. total factor productivity, for instance, has been on a rising trend since 1993. another possibility is that, for various reasons, the labour market is functioning more efficiently. one indication of this is that rapidly falling unemployment in recent years has not been accompanied by acute labour shortages. perhaps i should mention that we have also detected certain changes in inflation relationships. in a box in one of last year ’ s inflation reports, for example, we found that the impact on inflation from a given output gap has decreased ; one explanation for this could have to do with inflation expectations being more stable. at the bis seminar, moreover, two papers provided indications of changes in relationships behind the prices of imported goods. that agrees with the picture we have formed in recent years. the pass - through to inflation from exchange rate movements, for example, is lower than before. this may be connected with stronger competition at various levels. it also seems clear that permanent exchange rate adjustments have price effects that differ from and are greater than those elicited by movements that are a natural part of today ’ s flexible regime. in any event, in the last few years there have also unquestionably been favourable effects from the deregulation of electricity and telecom markets. even though similar changes of equal importance for the rate of price increases in the coming years are not easy to identify today, both deregulations and generally growing competition will presumably be important features in the picture of inflation. another point worth making is that in a world where monetary policy with a more independent mandate is focused on low inflation in a growing number of countries, low inflation as such is presumably an important factor. that is really what the textbooks teach us to expect, with their standard message that inflation is a monetary phenomenon, determined precisely by monetary policy. inflation expectations that are low and stable clearly help to combat inflation. but i believe the low - inflation policy has wider implications. it is presumably one factor behind the recent improvement in trend productivity in sweden. firms today are exposed to considerably stronger pressure to change than they were in the 1980s. the conditions for labour market negotiations have also changed in ways that may well have positive effects on unit labour costs and thereby on inflation. another consequence is that measures for strengthening competition have suddenly become politically relevant in ways that were not the case at least when i was working on such questions in the 1980s. deregulation and the enhancement of competition can

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