the next round of wage negotiations as they would have done otherwise, or that they will pay less when they purchase books from the publishing companies. when a market is exposed to competition, this can have both direct and indirect effects on prices and wages. the price - dampening effects of increased competition can contribute to subduing inflation for a period of time. one example of this is the deregulation of the electricity and telecommunications markets that contributed to the low inflation rate during 1999 and 2000, although the price - dampening effects disappeared at the end of 2000. since then, electricity and telecommunications prices have contributed to higher inflation. increased competition means that companies have to use their resources more effectively and be more cost - conscious. growth and productivity will therefore increase. lasting effects on productivity growth could affect the potential growth rate, i. e. how quickly the economy can grow given the amount of labour and capital available and without a rapid rise in inflation. however, this type of development is not without problems. if there is a series of improvements in productivity, the result will be higher growth and limited pressure on prices. during such periods there may be slightly exaggerated optimism over long - term sustainable growth in profits and income, which will also tend to affect prices of various assets, such as shares, houses and apartments. if the central bank makes the mistake of conducting an overly mild monetary policy during such a period, perhaps because inflation is below the target level for a period of several years, there is a risk that the underlying price pressure will increase and future inflation will soar. the relationship between potential growth and competition is not unambiguous. it may be the case that a new invention gives rise to a temporary monopoly – partly due to legislation regarding patents and partly because it involves technological progress. some economists, and in particular joseph schumpeter, have even claimed that the endeavour to achieve these temporary innovation monopolies is one of the most important driving forces behind technological developments ( which together with labour supply comprise the motor for long - term potential growth ). one example is the pharmaceuticals industry, where the development of new products would probably not be possible at the same rate if new medicines were not protected by patent laws. incomplete competition is thus important for ensuring that product development takes place within research - intensive operations. there may even be special circumstances that make production most effective under limited competition. this applies in particular to various types of infrastructure, for instance the trunk network for electricity and water, which are what is

speech date : 3 april 2020 speaker : governor of the riksbank stefan ingves venue : www. riksbank. se sveriges riksbank se - 103 37 stockholm ( brunkebergstorg 11 ) tel + 46 8 787 00 00 fax + 46 8 21 05 31 registratorn @ riksbank. se www. riksbank. se the riksbank ’ s measures to mitigate the effects of the corona crisis on the economy these last three weeks have been some of the most dramatic sweden has experienced in modern times. on 10 march, we told the parliamentary committee on finance that the assessments described in the monetary policy report from february had become entirely irrelevant. 1 we already knew then that the swedish economy would be affected by the coronavirus. what we did not know, however, was the force and extent of the impact. our message then was that the riksbank was ready to act to mitigate the negative effects on the economy. since then, we have spoken to both companies and banks, and we have implemented a number of measures. today, i ’ d like to talk about what we have done and how the measures are contributing to the ongoing economic crisis management effort. “ everything has changed in two weeks ” “ everything has changed in two weeks ” this was one of the quotes from the companies we have interviewed on account of the corona pandemic2. the fact is that the situation is changing so rapidly that it is difficult to form an idea of exactly how bad things are in the economy. i have never previously experienced such rapid change, despite this being the third major economic crisis in sweden that i have been involved in. the riksbank is tracking indicators and also interviewing more companies than normal in order to get an idea of how the situation is changing from day to day and from week to week. what is beyond a shadow of a doubt, however, is that many in society are struggling right now. my thoughts are obviously with all the country ’ s fantastic health workers who are on the front line. on a personal level, many are also struggling https : / / www. riksbank. se / en - gb / press - and - published / notices - and - press - releases / press - releases / 2020 / ingvesand - breman - at - riksdag - committee - on - finance - the - riksbank - is - prepared - to - act / https : / /