jens thomsen : brief overview of the danish economy statement by mr jens thomsen, member of the board of governors of the national bank of denmark, at the meeting of the danish economic council, copenhagen, 30 november 2004. * * * the cyclical analysis of the chairmanship of the danish economic council is in line with other analyses : the danish economy is in an upswing, driven by strong growth in domestic demand. this contributes to bringing down unemployment and raising labour force participation. the latest national accounts figures indicate that growth is slowing down, but these figures are often revised significantly and thus uncertain. it goes without saying that it is prerequisite to danish economic development that the international cyclical scenario does not weaken markedly. danmarks nationalbank agrees with the chairmanship that fiscal relaxation is not required. fiscal policy must be formulated for the medium term, based on the 2010 plan. short - term fiscal adjustments tend to have unwanted effects. obviously, structural measures must be taken to keep the surplus on public finances at 1½ - 2½ per cent of gdp. here, the report points out that the lack of new employment - policy initiatives gives cause for concern. chapter 1. 4 ’ s discussion of wage competitiveness scarcely touches on the issue of productivity development. how can it be that danish wages have been rising faster than those of our competitors for a number of years and the effective krone rate has risen, while the employment level has been high, and has recently begun to rise again, and we have enjoyed a sound ( and rising ) surplus on the current account? this combination is worthy of a few comments, including the issue of productivity growth, even if it is not obvious what is cause and what is effect. as far as excise duties are concerned, it should be emphasised that some of these are highly sensitive to cross - border trading. therefore, changes in relative prices may have great consequences. the same applies to duties on pesticides. a ban on pesticides would be most effective if accompanied by a similar ban in our neighbouring countries. the proposal to introduce a tax allowance for maintenance and repair of one ’ s own home seems to conflict with the efforts to expand the tax base and reduce tax rates. the views advanced on the stability and growth pact are pertinent. clearly, the task is to increase the incentive to consolidate in the good times in order to avoid easing fiscal policy as seen in germany and france in 2001 and 2002. introduction of exceptions for certain expenses, such

with and evidence suggests that those with higher wealth have a higher propensity to save increases in income ( this idea goes back to kalecki ( 1954 ) and marx before him ). increases in job polarisation and skills premia, which also shift income towards the top of the distribution, are likely to add to this effect. globally, inequality could also increase as a result of the fourth industrial revolution, which would further lower the equilibrium rate in open economies like the uk and ireland. summers ( 2016 ) has argued that rising market concentration may also have been an important cause for the fall in the equilibrium interest rate over recent decades. see http : / / larrysummers. com / 2016 / 03 / 30 / corporate - profits - are - near - record - highs - heres - why - thats - aproblem /. measured as the proportion of people working part - time would who prefer a full - time job. all speeches are available online at www. bankofengland. co. uk / speeches this excess supply of labour available to work on non - automated tasks represents a shift along the phillips curve, imparting modest disinflationary pressures. for the uk, each additional percentage point of labour market slack is estimated to reduce annual wage growth by one third of a percentage point. however, mismatches between the skills of the current workforce and those required by the new technologies or other substantial frictions to workers changing role could cause the equilibrium unemployment rate to rise alongside any increase in unemployment – particularly if the speed of adoption of new technologies is faster than in the past. that would shift the phillips curve up, reducing the disinflationary effects of automation. at present, there is little evidence to go on to judge the likely size and persistence of any increasing in structural unemployment. monetary policy makers will need to remain alert to this possibility, updating their assessment as the transition occurs. the experience of the 1970s shows that mistakenly ascribing a structural pickup in unemployment to cyclical factors can lead to the wrong macroeconomic policy setting, with long - lasting adverse effects. a more automated world could also affect inflationary pressures through flattening the phillips curve. the threat of robot substitutes could weaken workers ’ bargaining power. and advances in artificial intelligence and similar technologies could increase companies ’ ability to learn about their competitors ’ marginal costs and leading to greater synchronisation of price changes across companies. already, there is evidence that online retailers adjust prices