is welcome, but it ’ s only the most tangible part, i. e. technological innovation, which is typically recorded. business model innovation is excluded. what ’ s more, investment in organisational capital and human capital are not recorded in national accounts, even though this will become ever more important part of capital growth as more jobs become automated and skill premia rise. even more complex is how to measure the value of digital innovations in terms of, say, the time they save for consumers or for national output. how should we value the ability to conduct banking via a smart phone? or get directions through google maps? 5 this isn ’ t just a question of the so - called “ consumer surplus ”, which is about welfare. it ’ s a question of whether improvements in quality are being properly valued. and as more and more services are provided in this intangible way, the likelihood of significant mismeasurement of the full value of goods and services in our economies rises. the flipside of digital services is that more activities that were previously part of the market economy can now be produced at home. a person wanting to arrange a holiday, for example, no longer needs to visit or phone a travel agent, but can research and book the whole trip herself online. the sales of hotels and flights still contribute to gdp. but the work formerly done by the travel agent, which has now effectively been outsourced to the consumer, disappears. this also raises questions for how we measure productive activity. these examples highlight the difficulties of understanding how the economy is developing – let alone estimating its potential growth rate. to be sure, we should aim to rise to that challenge and update our statistics to capture such changes. but clearly, as policymakers, we also have to be humble about what can know. and in that context, imagining that we can reliably hold the output gap around zero is simply hubris. see : olivier blanchard, eugenio cerutti and lawrence summers, inflation and activity – two explorations and their monetary policy implications ”, imf working paper wp / 15 / 230 ( november 2015 ). see : erik brynjolfsson and andrew mcafee, the second machine age : work, progress, and prosperity in a time of brilliant technologies ( w. w. norton & company, 2014 ), especially chapter 8. https : / / www. gov. uk / government / uploads / system / uploads / attachment _

. since the early 1990s euro area labour productivity growth per person employed has been falling behind the us, and that has continued during the crisis. since 2008, euro area productivity has averaged only 0. 2 % per year, while us it has increased by around 1. 0 % a year over the same period. 8 in the us this is also seen as a low figure, and recently it ’ s been debated there whether the productivity slowdown seen in the us over recent years isn ’ t simply the outcome of the mismeasurement i highlighted earlier. this is based on the observation that the productivity slowdown has been associated with marked declines in employment, whereas typically the latter would tend to raise productivity. 9 similar arguments are made by marvin goodfriend mervyn king in their review of the riksbank ’ s monetary policy 2010 – 2015, ( stockholm : 2015 ). claudio borio, magdalena erdem, andrew filardo and boris hofmann, “ the costs of deflations : a historical perspective, ” bis quarterly review, march 2015, pp. 31 – 54. see the box entitled “ a tale of two crises : recent developments in euro area and us employment, ” in the december 2015 issue of the ecb economic bulletin, and, for a longer term analysis, the article entitled, “ productivity developments and monetary policy, ” in the january 2008 issue of the ecb monthly bulletin. lawrence summers, “ reflections on the productivity slowdown, ” keynote address to the conference : making sense of the productivity slowdown, peterson institute for international economics ( washington, d. c. ” : 16 november, 2015 ) : http : / / www. iie. com / publications / papers / transcript - 20151116keynote. pdf. bis central bankers ’ speeches there may well be some truth in this. after all, it ’ s well - known that the national accounts often take a long time to fully count the effects of innovations in technology. for example, us national accounts did not reflect the output from automobiles for nearly 15 years after the ford model t was available. 10 but even if we are mis - measuring productivity, we still need to raise it : the euro area is still lagging considerably behind others. and worse still, we only seem to be able to achieve productivity growth if it ’ s traded - off against employment. in recent years, much of the ( meagre ) productivity growth seen in the euro area has come