abdul latif jameel poverty action lab ( j - pal ) at m. i. t, which runs field experiments aimed at measuring different ways to save the world. in 2009, j - pal won the bbva foundation “ frontier of knowledge ” award in the development cooperation category. bis central bankers ’ speeches 17. professor banerjee ’ s general research areas include economic development, information theory, theory of income distribution, and macroeconomics. 18. as you know, an economist ’ s caliber – particularly an academic one ’ s – is primarily judged by the quality of his publications ; and to date dr banerjee has published no less than 60 papers in the world ’ s leading economic journals. the important lesson from this volume of research is that it has focused on real world issues with real world solutions. his latest research is based on studying economic interventions on the basis of “ randomized controlled trials. ” the idea is simple enough – to compare groups of people with and without policy intervention over a period of time ; akin to the trials of new drugs. 19. in addition to his scholarly work, he has authored three books, including his recent one called “ poor economics ”, which has received the attention of scholars across the globe. and this is not the all ; he is an ex - president of the bureau for the research in the economic analysis of development, a research associate of the nber, a cepr research fellow, an international research fellow of the kiel institute, a fellow of the american academy of arts and sciences and the econometric society and has been a guggenheim fellow and an alfred p. sloan fellow. he has also been a recipient of the infosys prize 2009 in social sciences and economics. 20. dr. banerjee and his colleagues at j - pal have worked with a global network of researchers to conduct experiments in the poorest places of the world and have derived conclusions that are believed to have challenged economists ’ and policy makers ’ thoughts about impoverished areas. their findings have concluded beyond broad generalizations to show that the poor do not always act in ways that conform to the views and programs of wellmeaning relief agencies, revealing a portrait of poverty as complex as the movements of financial markets. 21. professor banerjee will be delivering his lecture today on the topic of “ micro - credit and financing of small business ”. needless to emphasize that it is an important topic, particularly when seen in the backdrop of the challenges faced

target for most of the past two years. this is not in itself a particularly powerful argument, because the undershoot has been marginal and probably owes a great deal to the unexpected strength of sterling. indeed, before we began to track a little below the target, we had for around two years been tracking above it. nonetheless, the strength of demand in the economy does seem to have exercised less upwards pressure on prices over the past two years or so than we would have expected from earlier experience ; and this applies both to prices of goods sold in the product market and to pay and earnings in the labour market. why is this? in the product market, one factor may be greater competition, which has caused producers and retailers to accept lower margins. another factor may be new forms of marketing and retailing, for example the spread of e - commerce. this may have cut the cost of distribution, and it may also have intensified consumers'awareness of prices and their resistance to price increases, by enabling them to compare prices more easily. another possibility is that we may be seeing an increase in productivity growth, perhaps stimulated by the pressures many businesses faced from the strength of sterling, and perhaps also arising from the application of it possibly the beginnings of the arrival of the new economy from across the atlantic. in the labour markets, reforms which have made possible greater labour flexibility, and competitive pressures which have stimulated firms to adapt more quickly to changes in their business environment, may underlie the more benign performance of real earnings growth. more widely, the greater stability the economy has enjoyed in recent years from the medium - term framework that governs both fiscal and monetary decisions may, by stabilising inflationary expectations at a low level, have made it less attractive, and more risky, to try to raise prices even when demand is strong, and may also have enabled industry and commerce to plan their business activities on a sounder and more forward - looking basis. there is plenty of evidence that all these factors are, in varying degrees, at work in the uk ; and they offer the prospect of genuine improvements in the functioning of the economy. but the question is - on what scale, and are the improvements temporary or here to stay? we take considerable care to try to factor these developments into our decisions on interest rates, but the difficult judgment is to assess how much faster the economy can grow as a result without jeopardising our inflation target. my own view is that supply - side improvements are delivering benefits, but