speech date : 13 / 11 / 2019 speaker : deputy governor martin floden venue : orebro university and kommuninvest, orebro sveriges riksbank se - 103 37 stockholm ( brunkebergstorg 11 ) tel + 46 8 787 00 00 fax + 46 8 21 05 31 registratorn @ riksbank. se www. riksbank. se monetary policy in a changing world * over the past year it has become increasingly clear that economic growth is slowing down, both in sweden and abroad. it is not surprising that growth is slightly lower than during the strong years 2014 - 2018. but there have recently been increasing signs that the slowdown will be larger and occur faster than we at the riksbank have been expecting. to determine how monetary policy should react to this, we need to understand why growth is falling. is it due to weaker cyclical economic activity, or to deeper, structural changes in the economy? today i intend to first briefly discuss some structural changes that may have had significance for economic developments in recent years. these are changes that may have entailed lower underlying interest rates and growth and lower inflationary pressures, and which may affect the conditions for the riksbank's work going forward. after that, i will say a few words about the possibilities open to monetary policy if economic developments become weaker than we have forecast. in conclusion, i would like to say a few words about climate change, one of the structural changes that affects the way the economy functions. how is the riksbank ’ s work affected by climate change and how can the riksbank contribute to greener financial markets? the economy changes the international economic playing field has changed in many ways in recent years. let me give some examples : • the geopolitical situation has deteriorated and nationalistic tendencies have become more common. this has led to increased protectionism and new many employees have contributed valuable comments on the first draft of this speech. i would like to thank in particular iida hakkinen skans, bjorn lagerwall, asa olli segendorf, rebecka hallerby and marianne sterner. * 1 • • • • trade barriers. after many decades of increased international trade and international capital flows, globalisation has now taken a step back. 1 china has emerged as an increasingly important actor on the world market. this has led, for instance, to increased saving in the world economy and contributed

mr heikensten examines different aspects of the new economy and its implications for monetary policy speech by mr lars heikensten, first deputy governor of the sveriges riksbank, to the riksdag ’ s standing committee on finance, stockholm, on 24 february 2000. * * * the new economy, our topic today, is a concept that people are using frequently without always taking the trouble to explain what they mean by it. as interpretations differ somewhat, the discussion is liable to be a little confused. according to the definition most people seem to have in mind, the new economy is a result of a favourable shift in trend productivity that has raised the potential growth rate. this shift is attributed in turn to the development and spread of information technology ( it ). another common explanation for the higher productivity growth is the stronger competition that has resulted from deregulations and an increasingly integrated global economy. moreover, in that much of the discussion of the new economy originated in the united states in the light of the good economic performance there in the 1990s, emphasis has been placed on the importance of a good macroeconomic environment. my starting point today is the us economy. my primary aim is not to present a comprehensive picture of developments there but rather to highlight the issues that these developments have raised and initiated the debate on the new economy. while my discussion will centre on the advances in it, for the us economy there have been other beneficial factors. then i shall look in a more principled way at what the new economy may imply for monetary policy. in this context i shall mainly consider the consequences in terms of higher productivity growth, but i shall also be touching on the new economy ’ s impact on demand, which has attracted less attention in the public debate. this will be followed by a look at sweden and the conditions for a new economy and the inflation process. what is the situation here as regards, for example, the use of it and competition? has the new economy led to changes in the inflation process? finally, i shall be saying something about what the riksbank has to consider in the context of the new economy ’ s existence or non - existence. my review today obviously will not result in definite answers either way. the questions are too complex for that. economists are finding it difficult in general to arrive at sound explanations for technical development and growth. the discussion about the new economy is therefore welcome on that account. it can inspire studies of the driving forces behind the technical