in times of economic slack. 10 conclusion to sum up, the current low unemployment rate and the recent wage increases do not necessarily imply that higher inflation is around the corner. first, measuring economic slack is fraught with well - known difficulties. second, both theory and empirical studies suggest that the wage - inflation pass - through varies over time and depends on many factors. arguably, the structural changes under way in advanced economies imply that the pass - through may be on the decline. the bottom line is that monetary policy decisions need to be based on a wide array of economic indicators, not just the unemployment rate and wages. i have touched upon some of the economic effects of the it revolution. while there might be dangers ahead, i have no doubt that, with appropriate regulation, this revolution will contribute to growth and prosperity in europe and the world. it will also change the way we work in central banks. we are actively trying to foster this change. 1 for alternative estimates of the euro area output gap, see research from the european commission and the imf, or jarocinski, m. and lenza, m. ( 2018 ), “ an inflation - predicting measure of the output gap in the euro area ”, journal of money, credit and banking, vol. 50, no 6, pp. 1189 – 1224. 2 see, for example : trainer, d. ( 2016 ). “ how the internet economy killed inflation, ” forbes, 28 september ; and cohen, p. and tankersley, j. ( 2018 ), “ e - commerce might help solve the mystery of low inflation ”, the new york times, 11 june. 3 cavallo, a. ( 2018 ), “ more amazon effects : online price competition and pricing behaviors ”, paper presented at the 2018 jackson hole economic policy symposium. 4 aghion, p., beragaud, a., boppart, t., klenow, p and li, h. ( 2019 ), “ a theory of falling growth and rising rents ”, working paper series, federal reserve bank of san francisco. 5 haskel, j. and westlake, s. ( 2017 ), capitalism without capital : the rise of the intangible economy, princeton university press ; corrado, c., haskel, j., jona - lasinio, c. and iommi, m. ( 2012 ), “ intangible capital and growth in advanced economies

at the same time not be a transparent means to communicate this complexity. overall, projection exercises provide a main element within the second pillar, but they do not offer an all - encompassing summary device. four and a half years have elapsed since the announcement of the eurosystem's monetary policy strategy. these years provide a wealth of information, in terms of direct experience and of views by external observers. in december 2002 the president of the ecb announced that the eurosystem would conduct an extensive analysis of its strategy. the evaluation encompassed a thorough assessment of comments from academics, analysts and journalists. in plain analogy with the majority of the comments received, the evaluation process focused on three aspects, namely a ) the definition of price stability, b ) the role of money and c ) the two - pillar architecture. 1. the definition of price stability the treaty ( art. 105. 1 ) assigns to the eurosystem the primary objective of maintaining price stability. on 13 october 1998 the ecb governing council defined price stability as " a year - on - year increase in the harmonised index of consumer prices ( hicp ) for the euro area of below 2 % ". price stability according to this definition " is to be maintained over the medium term ". critics mainly addressed three aspects of this definition, namely the choice of the price index, the choice of the quantitative value for the objective and the format of the definition. 1. 1 the choice of the price index the hicp for the purpose of setting a quantitative objective for monetary policy, a price index should embody a number of essential properties, such as credibility, reliability, timeliness and frequency. the hicp was initially created for the assessment of price convergence in stage two of emu and is largely harmonised across euro area countries. it scores particularly high in the above criteria. there is no controversy in that eurostat provides a high quality price index at international standards. headline inflation versus core inflation the choice of the headline measure has the advantage of transparency : it provides the measure that most closely approximates the price of a representative basket of consumption goods and services purchased by euro area households. in theory, core inflation represents an appealing concept in that it filters out the more volatile components and / or temporary factors, which should be disregarded for monetary policy purposes. in practice though, measures of underlying inflation may lack credibility with the public. furthermore, there is no unique method to derive such measures and different measures often provide very different figures