- term value. 12 fluctuations and inflation, see figure 7. when the krona weakens, i. e. when the kix - index increases, inflation also rises. figure 7. inflation and exchange rate fluctuations, 27 - month time lag annual percentage change 2. 5 2. 5 inflation 1. 5 1. 5 0. 5 0. 5 - 10 - 5 exchange rate fluctuations note. moving averages over 12 months. sources : statistics sweden and the riksbank of course, the correlation between the exchange rate and inflation is neither clear - cut nor straightforward. it depends, for example, on what has caused the exchange rate to fluctuate and how long it is expected to last. 6 but the fact that there is a correlation, insofar as a weakening of the exchange rate tends to result in rising inflation and vice versa, is obvious. finally, it should be emphasised that monetary policy has of course been important in this development. from the ongoing debate, the impression can sometimes be that monetary policy does not play such a major role and that economic activity had been just as strong and inflation had been on target regardless of the policy conducted by the riksbank. this is of course not the case. no causal relationship between wages and prices what then does the fact that inflation has risen but not wages actually signify? to begin with, and for the sake of completeness, we can also plot inflation against wage increases ( see figure 8 ). as we see, there is a tendency towards a positive correlation, at least periodically. see for instance the articles “ the impact of the exchange rate on inflation ” in the december 2016 monetary policy report and “ the exchange rate and inflation ” in the april 2018 monetary policy report. 13 figure 8. inflation and wage increase annual percentage change 2. 5 2. 5 inflation 1. 5 1. 5 0. 5 0. 5 2. 0 2. 5 3. 0 3. 5 wage increase 4. 0 4. 5 note. moving averages over 12 months. sources : national mediation office, statistics sweden and the riksbank but what about the causal relationships? there sometimes appears to be a tendency to see wage increases as the source of all inflation. the perceived chain of events is that an increase in inflation is always preceded by a tighter labour market pushing up wage increases and companies then passing on the increased costs in the form of higher prices. can we therefore expect modest wage increases to push down inflation going forward?

urban backstrom : the swedish economy speech by mr urban backstrom, governor of the sveriges riksbank and chairman of the board of directors and president of the bank for international settlements, to the swedish shareholders ’ association, orebro, 30 october 2001 * * * first a word of thanks for the invitation to come to orebro and discuss matters to do with the swedish economy with you. it is now a fortnight since the riksbank presented this year ’ s third inflation report. some more statistics have been published in the meanwhile but the information they contain does not point to anything particularly new. so today one can hardly arrive at an assessment of economic developments in sweden one to two years ahead that differs all that much from the picture outlined in the report. those of you who want to know more about our assessment should consult the riksbank ’ s website, www. riksbank. se. the whole report can be downloaded, as can all the figures on which the tables and charts are based. diagram 1 : the ” new economy ” concept in swedish media. ( number of hits ) 2001 jan. oct. sources : mediearkivet and presstext. there are, however, a couple of questions concerning the swedish economy and the outlook in the somewhat longer term that i should like to dwell on here today. diagram 2 : ” the it - bubble ” affarsvarlden : it - index index nasdaq : nasdaq : composite dow jones : industrials usa dow jones industrial average, close daily [ index 1996 - 01 - 02 ] sources : hanson & partners ab. usa nasdaq composite index, close daily [ index 1996 - 01 - 02 ] one is what has happened to the discussion about the “ new economy ”. swedish media are mentioning the subject less and less ( diagram 1 ). i believe that mirrors how people ’ s interest in general has waned. and considering how rapidly and extensively prices have fallen for it and telecom shares, one is inclined to the view that all the talk about the third industrial revolution was really something of a dead end ( diagram 2 ). that leads on to my other question, namely the part that technological breakthroughs play for corporate profits and thereby for the return on equity. where did the “ new economy ” go? concerning my first question, perhaps it is not so surprising that we now hear less and less about the “ new economy ” than we did last year. share prices for it and telecom