it really that characterises a well - balanced monetary policy? it is normally a question of finding an appropriate balance between stabilising inflation around the inflation target and stabilising the real economy. it is difficult to translate what can be considered a well - balanced monetary policy in any given situation into precise and practical monetary policy. the intention behind stabilising inflation is relatively easy to understand, but the significance of stabilising the real economy is not so clear. in practice it is often interpreted as stabilising resource utilisation around its normal level. i think that is a fairly reasonable interpretation and it is not easy to argue for anything entirely different. at the riksbank we approach the concept of a well - balanced monetary policy by forecasting such things as inflation and resource utilisation for different monetary policy actions. after this we try to select the course of action associated with the best possible forecast outcome ; in other words the forecasts where inflation is best stabilised around the inflation target and resource utilisation around a normal level. this may sound simple and obvious but in practice is not that easy. in the first place, the best measure of resource utilisation is far from obvious and we executive board members may have slightly different opinions on this. 9 we are constantly working to improve the measures of resource utilisation and this is important. but as i see it implications, wiley 2003. lars nyberg discusses the balance sheet channel in more detail in the speech “ after the crisis – new thoughts on monetary policy ” published on 6 december 2010. for a more detailed discussion of how resource utilisation can be measured, see the speech “ potential gdp, resource utilisation and monetary policy ” by svante oberg held on 7 october 2010, and the article “ the driving force behind trends in the economy can be analysed using a production function ” in the monetary policy report of october 2010. bis central bankers ’ speeches we cannot give any single measure prime position as representing the one and only truth. it is wisest to continue using several different measurements as a guide. in the second place, situations sometimes arise where there is a conflict between stabilising inflation and normalising resource utilisation and different decision - makers may make different assessments. however, this has not been a problem recently as both underlying inflationary pressures and resource utilisation have been low. in the third place, in my opinion economic trends beyond forecast horizons should be taken into account, though

problem related to information technology is that it probably affects service production just as much as purely industrial production. service production is something of a black sheep in the economic statistics. there are often tremendous difficulties in distinguishing quality changes from price changes in this field, which leads to the statistics being less reliable. although a lot of effort has been put into the work on calculating gdp and other measures of economic developments in sweden, we should be aware of the uncertainty inherent in these estimates. this is also an important reason why a commission of enquiry was recently appointed to look into economic statistics in sweden. for the moment, however, we have to work on the basis of the published statistics and our experience, which tells us that good macroeconomic data should not provide a basis for complacency. the importance of humility is emphasised by the recent experiences several countries have had in asia. for instance, the experience of japan at the end of the 1980s and korea in the mid - 1990s, when traditional macroeconomic measures, such as consumer price inflation and public finances long indicated a favourable development. what was not so evident were the imbalances built up through stock exchange and property valuations and through low - yield investments. what is the reason behind the positive developments? is the positive development in sweden due to computers and the internet? it is of course possible that information technology has made a contribution, but is it a central part of the explanation? the new information technology is not very good at explaining what has happened so far in the swedish economy. the path of inflation is not determined by technological or organisational developments. there have been periods of technological development with rising, falling and constant price levels. in sweden, the shift in monetary and fiscal policy towards macroeconomic stability is an important part of the explanation for the improved economic developments. moreover, we have moved away from a tax system that severely restrained the economy ( stig malm called it perverse ), to a system that is less restrictive. we have moved away from an economy marked by detailed regulations, devaluation cycles and national perspectives, to an economy with well - developed credit markets, deregulation and greater international openness. the total of all these changes should contribute, with some time lag, to what has now happened, that is, that growth and productivity are developing more strongly. my point is thus that we should not overestimate the significance of information technology on what has happened so far in the swedish economy. the fact