changes to institutional rules. those aspects which have so far dominated the discussion are higher labour productivity as a result of the new technology and the attendant effects of this, in the form of sharper competition, which is expected to result in further improvements in productivity and in restrained price development. if these hopes were fulfilled, it would be a very positive development. a more rapid productivity development in a society is a crucial factor for creating a high standard of living. if we had had the same productivity development during the period 1974 to 1993 as during the past 5 years, our income level could have been approximately 10 % higher. expressed in a different way, the general discussion so far has been dominated by the possibility that the supply in the economy has increased. but, if households raise their expectations with regard to their lifetime incomes, consumption may in the short term be adjusted upwards more than domestic production allows. with regard to deregulation, the analyses are similar. they lead to a downward shift in price levels via increased competition. but here it is a question of nonrecurring effects and should not be interpreted as lasting lower inflation. in such a scenario, the net result in the short term will not necessary be falling inflation - it could just as well be rising inflation. this is one of the risks in this context. another risk that has not been discussed much yet refers to a longer - term perspective. changes create both winners and losers. lower purchase prices for a business owner or for us consumers may involve a lost profit margin for other companies. an increase in productivity may involve redundancies and that companies which are unable to keep up with developments are wiped out. the structural transformation thus contains not only possibilities, but also social maladjustment that must be dealt with by the labour market, the capital markets, the education system, etc. what does this mean for monetary policy? i intend to discuss four areas that have figured in debates on monetary policy and the ‘ new and old ’ economy : the effects on interest rates, the effects on purchasing power, the economic relations and the riksbank ’ s intellectual framework. it would not have been possible for interest rates to lie at the current levels if price stability had not lowered the risk premium that lenders require for the uncertainty factor. in addition, the reduction in public borrowing and declining indebtedness has led to real interest rates being pulled down. but would this still apply if we had a higher growth in productivity in the future? one effect of

problem related to information technology is that it probably affects service production just as much as purely industrial production. service production is something of a black sheep in the economic statistics. there are often tremendous difficulties in distinguishing quality changes from price changes in this field, which leads to the statistics being less reliable. although a lot of effort has been put into the work on calculating gdp and other measures of economic developments in sweden, we should be aware of the uncertainty inherent in these estimates. this is also an important reason why a commission of enquiry was recently appointed to look into economic statistics in sweden. for the moment, however, we have to work on the basis of the published statistics and our experience, which tells us that good macroeconomic data should not provide a basis for complacency. the importance of humility is emphasised by the recent experiences several countries have had in asia. for instance, the experience of japan at the end of the 1980s and korea in the mid - 1990s, when traditional macroeconomic measures, such as consumer price inflation and public finances long indicated a favourable development. what was not so evident were the imbalances built up through stock exchange and property valuations and through low - yield investments. what is the reason behind the positive developments? is the positive development in sweden due to computers and the internet? it is of course possible that information technology has made a contribution, but is it a central part of the explanation? the new information technology is not very good at explaining what has happened so far in the swedish economy. the path of inflation is not determined by technological or organisational developments. there have been periods of technological development with rising, falling and constant price levels. in sweden, the shift in monetary and fiscal policy towards macroeconomic stability is an important part of the explanation for the improved economic developments. moreover, we have moved away from a tax system that severely restrained the economy ( stig malm called it perverse ), to a system that is less restrictive. we have moved away from an economy marked by detailed regulations, devaluation cycles and national perspectives, to an economy with well - developed credit markets, deregulation and greater international openness. the total of all these changes should contribute, with some time lag, to what has now happened, that is, that growth and productivity are developing more strongly. my point is thus that we should not overestimate the significance of information technology on what has happened so far in the swedish economy. the fact