national accounts indeed have a hard time taking into account improvements in product quality and product entry or exit. as a result, they tend to overestimate inflation and underestimate output. for instance, there is currently an issue with it hardware, as output of these products is inadequately recognised, even in the us. but the growing share of digital computing technologies in economic activity raises new specific challenges, both on a conceptual and practical level [ slide 4 ]. let me take the example of travel services. on a conceptual level, digitalization is blurring the frontier between the market and informal economy, and leading to the development of “ c to c ” services ; for example, many of us now directly buy our holidays on - line. this disintermediation of services has been accompanied by a significant improvement in their quantity and quality. yet, travel services are now in large part ‘ home production ’, and the measured market value added of travel agency services is declining. on a practical level, with the rise of digitalization, new kinds of services can be imported, notably through e - trade, and the location of activities is less easy to determine. moreover, the fact that 1 / 3 bis central bankers'speeches these services are not standardized and evolve quickly makes it more difficult to estimate the deflator for service output in national accounting. the concern over output mismeasurement is therefore serious. yet mismeasurement alone cannot explain all of the slowdown, as it did not suddenly appear in the mid - 2000s. 2. is it also a demand phenomenon? i am very much inclined to say it is. negative demand shocks are particularly pernicious when interest rates are already low, as there is limited room to spur demand by cutting interest rates. in central banking jargon, we say that short - term interest rates cannot be reduced to the “ natural rate ”, which is the level where demand equates to potential output and inflation is stabilized. faced with these constraints, major central banks have implemented an array of non - conventional measures, including forward guidance and qe, in order to help stimulate demand by lowering long - term interest rates further. so why is demand proving so slow to pick up in spite of these highly stimulatory measures? [ slide 5 ] wage - setting mechanisms are likely to play a role. insufficient attention has been given to this, due to differences between countries and the fact that it is a micro - level issue.

francois villeroy de galhau : secular stagnation and growth measurement speech by mr francois villeroy de galhau, governor of the bank of france, at the secular stagnation and growth measurement conference, organized by the bank of france, paris, 16 january 2017. * * * accompanying slides ladies and gentlemen [ slide 1 ], i am very pleased to welcome you all to paris, for this conference on “ secular stagnation and growth measurement ”. we should always be cautious when using expressions as categorical as “ secular stagnation ”, and which describe the long term : alvin hansen, who coined it in 1938 with his famous “ full recovery or stagnation ”, lived long enough – until 1975 – to see thirty years of almost full recovery, instead of stagnation. nevertheless, this risk, popularized again recently by larry summers, is a matter of concern for central bankers. why? because a persistent slowdown in trend output growth could make the economy more vulnerable to shocks that push the natural interest rate below the effective lower bound. whether secular or lasting for many years, very slow growth and inflation also challenge the efficacy of conventional monetary policy tools. they can affect the sustainability of public and private debt. and beyond central banking concerns, they can also alter the functioning of our social models. let me just clarify that i will not speak about monetary policy today, as we are in our “ silent period ” before the governing council meeting. allow me to say simply that some of the more recent comments about a “ come back of inflation ", which would allegedly put the governing council under strain, seem greatly exaggerated. so, where do we stand? the slowdown in per capita growth in advanced economies can actually be traced back to the 1970s [ slide 2 ]. it worsened in several stages, the latest starting in the mid2000s, after the ict revolution and before the great recession. the issue is that this prolonged slowdown raises questions about future potential growth, largely due to uncertainty about productivity trends. to assess the risks, i would like to elaborate on the three hypotheses that form the basis for today ’ s conference [ slide 3 ] : first, are we simply underestimating growth? second, is the slowdown a demand phenomenon? third, is it a persistent phenomenon due to a slowdown in the pace of innovation? 1. are we underestimating growth? new technologies usually lead to a mismeasurement of output.