this sample of the population votes in equal numbers for this year's menu and for that available five years ago, one can conclude that prices have been stable over the five - year period. if the majority vote is for the earlier menu of goods and services, one can conclude that prices have risen, or that the utility value of the $ 1, 000 has decreased. if the majority vote is for the recent menu, one can conclude the reverse - - that true prices have actually declined. i have seen no rigorous polling evidence on this question. but for years in teaching college macroeconomics courses, and recently at the fed, i have conducted such a poll among my audiences. all audiences have reported that their understanding of what inflation is all about was much improved by this thought experiment. generally, college students have voted for the current menu even in times when the aggregate rate of price increase averaged 3 percent or more, implying that they felt that true prices had actually declined. college students may be unusually influenced by fads that do not truly improve goods ( narrow or wide ties, etc. ), and the implicit bias in measured price indexes may well be overstated by collegiate polls. since coming to the fed, i have had the opportunity to talk to and poll many banker groups about inflation, and as one would expect, they are generally more inclined to vote for the earlier menu of goods than were my college students, at any given rate of inflation. but these days, when measured rates of inflation are running at 1. 5 percent to 2 percent, even bankers consistently vote for the current menu of goods by fairly wide margins. if even bankers feel that the implicit measurement bias in price indexes exceeds 2 percent, that may be a phenomenon worth noting. the upshot of this highly anecdotal test is that i have long suspected that true price stability might really be achieved in the vicinity of measured inflation rates of 2 percent or even more. it would be desirable to ground this type of information more firmly in modern - day techniques of data collection. ideally, consumer survey groups would run polls of currency utility and make periodic reports, the way they already do for indicators of consumer confidence and spending plans. short of that, there is one econometric calculation that provides some support to my informal voting results. nordhaus ( 1998 ) compared real incomes as measured by the cpi with survey research center data in which people were asked how their financial condition changed over the past year. he fitted a regression to

. the best confirmation of the correctness of our approach is the results achieved – the demonstrated resilience to external shocks unprecedented in recent history and favourable macroeconomic prospects for our economy. this is also recognised by relevant international institutions, including the imf, which assesses that we are recording impressive results and that we have earned trust. inflation in serbia returned within the 3±1. 5 % target band without any major tradeoffs in terms of economic activity. this is indicated by economic growth that will, in cumulative terms, exceed the pre - crisis level by more than 18 %. in addition, this year again, and probably in the medium run too, serbia's economic growth will be one of the strongest in europe. 2 / 4 bis - central bankers'speeches financial sector stability has been preserved and the npl ratio now stands at the lowest level on record ( 2. 7 % ). public finances are sustainable, and the country's external position strengthened. the country's fx reserves are at record levels both in terms of their volume and structure. at over eur 28 bn, they cover more than 7 months'worth of the country's imports of goods and services. fdi inflow is also record high. it reached eur 4. 6 bn last year and is forecast to reach a similar level this year as well. for all these reasons, for the first time in its history serbia has been assigned investment grade rating by standard & poor's, which brings us closer to developed economies. another confirmation of the growth and development of our economy is the new threeyear policy coordination instrument, which i expect the imf will approve to serbia in the coming several days. this instrument is granted exclusively to countries with sound economic policies and good prospects, which is the imf's assessment of serbia. his is also in line with our expectations for the future period. more specifically : inflation will continue to move within the target band. we expect economic growth to accelerate additionally to the range of 4 – 5 %, with the central projection of 4. 5 % and a good structure of growth. owing to the maintained investment confidence and favourable financing conditions, fixed fund investment will continue to provide significant support to economic growth. the investment potential comes from corporate profitability in the previous years, as well as from fdis, which represent an important source of transfer of new technologies and productivity growth. an additional impetus will come from the implementation of government capital investments planned by the " leap