gaps do not work well as measures of resource utilisation in deep recessions. however, despite this, my own assessment corresponds fairly well with the level that the hp gap indicates for 2009. it is also compatible with current forecasts indicating that the gdp gap should be largely normal by the end of the forecast period. total gdp growth for the three years 2010 – 2012 is just above 10 per cent, which is four percentage points more than growth according to trend of just above 6 per cent. what does resource utilisation mean to inflation and current monetary policy? previously, i said that the riksbank also strives to stabilise production and employment around development paths that are sustainable in the long term, and that by potential gdp i mean the level of gdp that is compatible with a utilisation of available resources sustainable in the long term and that will not push inflation up or down. as you know, the target for monetary policy is to keep inflation at a low and stable level. however, one problem when shaping monetary policy in practical terms is that the link between resource utilisation and inflation is not particularly clear. i will now discuss what resource utilisation means to inflation. in sweden, the link between resource utilisation and inflation has been weaker since the mid1990s than it was previously. this is due to the fact that monetary policy has gained a high level of credibility. as long - term inflation expectations among households and companies are now solidly anchored around the inflation target of 2 per cent, there is simply not much scope for other variables to affect inflation. however, it is also due to the fact that inflation is affected by many other factors than resource utilisation, such as variations in energy prices, exchange rate fluctuations and changes in interest rates. 13 however, the fact that it is difficult to estimate stable links between resource utilisation and inflation using econometric methods does not mean that these links do not exist. international experience indicates that minor variations in resource utilisation in normal times do not significantly affect inflation, but that a very low level of resource utilisation noticeably dampens inflation. in the current crisis, with a very low level of resource utilisation in the united states and the eurozone, underlying inflation has fallen from normal levels of around 2 per cent to around 1 per cent. as far as sweden is concerned, it appears that, despite everything, there is a relatively strong link between underlying inflation and resource utilisation

– which are not intended to vary over time – is affecting both interest rate margins and the supply of credit. one way of increasing predictability would be to adjust the regulations automatically, according to a specific rule, as, for example, is the case with the dynamic provisioning used in spain. 4 however, i do not consider it practically feasible to rely entirely upon automatic decision - making rules. uncertainty surrounding the manner in which regulations may change over time will thus always remain. however, it may be possible to learn lessons from the experiences of monetary policy in order to reduce this regulation risk premium. even if monetary policy is essentially conducted in a discretionary manner, economic agents frequently have a fairly good idea of the way in which the interest rate will change. naturally, i would like to believe that this is due to the present openness and clarity of monetary policy. hopefully, it will be possible to achieve an equivalent level of openness and clarity in the matter of time - varying regulations. one possibility could be to develop some kind of rule of action based on assessments regarding, for example, credit growth. such a rule would thus provide information on whether the “ regulatory controls ” needed to be shifted upwards or downwards. inspired by the taylor rule that is well - known within monetary policy, the arguments in the regulation could be formed of the non - time varying regulations ( z ), a measure of actual credit volume in relation to a level deemed sustainable over the long term l t l t, and the output gap : dynamic provisioning is, in principle, a rule in which banks make specific and general provisions when times are good for later use in less favourable periods. these provisions are rule - based and are built upon credit stocks and credit flows calibrated by data on average historical loan losses to different sectors. z t z z, lt lt, y t y t,.... i would like to emphasise that this is intended as an illustration of a so - far quite loose conception, rather than a concrete proposal. however, it is a useful illustration, not least because it indicates the comprehensive development work that will be required before anything practically applicable can result. nonetheless, i believe there are good conditions for development work within this area to result in equally healthy returns as the efforts expended upon developing monetary policy over the last fifteen to twenty years. the application of time - varying regulations also raises the issue of what would be an appropriate form of institutional organisation. different countries have chosen different