mr. greenspan ’ s remarks to the american economic association and the american finance association remarks by chairman of the board of the us federal reserve system, mr. alan greenspan, at the annual meeting of the american economic association and the american finance association held in chicago on 3 / 1 / 98. problems of price measurement for most of the past twenty years, the challenges confronting monetary policymakers centered on addressing the question of how inflation could be brought down with as little economic disruption as possible. given the progress that has been made in reducing inflation, and the very solid economic performance that this low - inflation environment has helped to promote, a new set of issues is now emerging on the policy agenda. of mounting importance is a deeper understanding of the economic characteristics of sustained price stability. we central bankers need also to better judge how to assess our performance in achieving and maintaining that objective in light of the uncertainties surrounding the accuracy of our measured price indexes. in today ’ s advanced economies, allocative decisions are primarily made by markets. prices of goods and services set in those markets are central guides to the efficient allocation of resources in a market economy, along with interest rates and equity values. prices are the signals through which tastes and technology affect the decisions of consumers and producers, directing resources toward their highest valued use. of course, this signaling process, which involves individual prices, would work with or without government statistical agencies that measure aggregate price levels, and in this sense, price measurement probably is not fundamental for the overall efficiency of the market economy. indeed, vibrant market economies existed long before government agencies were established to measure prices. nonetheless, in a modern monetary economy, accurate measurement of aggregate price levels is of considerable importance, increasingly so for central banks whose mandate is to maintain financial stability. accurate price measures are necessary for understanding economic developments, not only involving inflation, but also involving real output and productivity. if the general price level is estimated to be rising more rapidly than is in fact the case, then we are simultaneously understating growth in real gdp and productivity, and real incomes and living standards are rising faster than our published data suggest. under these circumstances, policymakers must be cognizant of the shortcomings of our published price indexes to avoid actions based on inaccurate premises that will provoke undesired consequences. clearly, central bankers need to be conscious of the problems of price measurement as we gauge policies designed to promote price stability and maximum sustainable economic growth. moreover, many economic transactions

are kept in check and productivity enhancements are achieved. the role of chartered accountants from the above it is clear that we face many challenges in the years ahead of us. the global recovery may continue to take several years before output gaps are closed. domestically we have significant structural challenges to overcome, but i believe that all of us, including the accounting profession, have an important role to play in this regard. the profession can make a tangible contribution towards ensuring that our businesses and public sectors are appropriately capacitated to deal with their many challenges, using the bis central bankers ’ speeches skills and knowledge that members acquire during their academic and practical training, including analytical capability, professionalism, integrity, understanding complexity, etc. it is also important that members of the profession respond positively to the call of public service. members should not merely become service providers to the public sector, they should also join the ranks of the public service in order to address the shortage of skills within that sector. in this context, they have much to contribute to root out corruption, design monitoring and early warning systems so as to ensure improved service delivery, institute controls that would minimise instances of wasteful and fruitless expenditure, and design reports so that politicians, officials, and other stakeholders have access to accurate and timely information. this should contribute to improved decision - making and policy outcomes. in time, the baton will pass to you and you will assume leadership positions both within the professional service firms, but also in the private and the public sectors. i do hope that you will do your best to strive to uphold not only the professional and ethical standards that is expected of you, but that you would in fact improve it further and ensure that in the process you tirelessly work towards both transforming the profession but also ensuring that it grows in an inclusive way. conclusion in order for us as a nation to move forward it is important that we all own up to the responsibility that we have to ensure that south africa reaches its full potential and, that it thrives and succeeds at all levels. as newly qualified chartered accountants many of you have a particular contribution to make to improve our competitiveness and performance, both domestically and within the global context and in that way help to improve the lives of all our people. once again, allow me to congratulate you on your outstanding achievement and be assured that we will be closely watching your progress. i thank you. bis central bankers ’ speeches