w a wijewardena : the role of statistics and challenges for statisticians keynote address by mr w a wijewardena, deputy governor of the central bank of sri lanka, at the stat day, organized by university of colombo, colombo, 26 march 2009. * * * consciously or unconsciously, we use statistics in everything we do in our day to day life. when we say that it rained yesterday, we simply pronounce a fact we have observed as having happened. when we say that it is raining now, we again mention something that we have observed as happening. when we say that it will rain tomorrow, we are predicting a future event. our life is full of such statements : facts that have been experienced by us in the past, facts that are happening now and being experienced in the present and facts that we feel would happen in the future. what has happened and is happening now are our personal experiences. what will happen are our learned judgements based on our experiences. if we keep these experiences and learned judgments to ourselves, then, it would not form the subject matter of statistics. it becomes statistics only when we share them with others. hence, statistics is basically, observing, analysing, learning and sharing facts about the real world. that sharing of facts need not necessarily be in quantitative or measurable form. they can be simple expressions in verbal form so that others could form opinions on the happenings in the real world. statistics do not have a heart or a religion when we express our personal experiences, we step into a dangerous territory. our personal experiences are guided by our emotional and subjective feelings. when we share them with others, we are inviting them to accept our emotional and subjective feelings as if they too have experienced the same. this is where we run into problems. unless others too have the same emotional and subjective feelings, there is no reason for them to accept our experiences as their experiences. hence, statistics to be shared by everyone should necessarily be based on objective considerations. in other words, statistics should not have a heart. its religion should be pure objectivity. it should convey facts as has been observed by an individual free from personal biases or prejudices. only such an impersonal statistical framework has the capability of serving people intending to use them for making judgments about the real world. how economic development occurs? an economy has to play a specific role towards its members. it has to produce and supply goods and services as demanded by them

cannot be reduced below zero, the federal reserve and central banks in other countries have employed nonstandard policies and approaches that do not rely on reductions in the short - term interest rate. we are still learning about the efficacy and appropriate management of these alternative tools. in the remainder of my remarks i will discuss these issues in the context of current economic and policy developments. i will comment on the near - term outlook for economic activity and inflation. i will then compare that outlook to some quantitative measures of the federal reserve ’ s objectives, namely, the longer - run outcomes that fomc participants judge to be most consistent with its dual mandate of maximum employment and price stability. finally, i will observe that, in a world in which the policy interest rate is close to zero, the committee must consider the costs and risks associated with the use of nonconventional tools when it assesses whether additional policy accommodation is likely to be beneficial on net. the outlook for growth and employment the arbiters across the river in cambridge, the business cycle dating committee of the national bureau of economic research, recently made their determination : an economic recovery began in the united states in july 2009, following a series of forceful actions by central banks and other policymakers around the world that helped stabilize the financial system and restore more - normal functioning to key financial markets. the initial upturn in activity, which was reasonably strong, reflected a number of factors, including efforts by firms to better align their inventories with their sales, expansionary monetary and fiscal policies, improved financial conditions, and a pickup in export growth. however, factors such as fiscal policy and the inventory cycle can provide only a temporary impetus to recovery. sustained expansion must ultimately be driven by growth in private final demand, including consumer spending, business and residential investment, and net exports. that handoff is currently under way. however, with growth in private final demand having so far proved relatively modest, overall economic growth has been proceeding at a pace that is less vigorous than we would like. in particular, consumer spending has been inhibited by the painfully slow recovery in the labor market, which has restrained growth in wage income and has raised uncertainty about job security and employment prospects. since june, private - sector employers have added, on net, an average of only about 85, 000 workers per month – not enough to bring the unemployment rate down significantly. consumer spending in the quarters ahead will depend importantly on the pace of job creation but also on households ’ ability to repair