, for instance, calmfors, l. ( 2002 ) : “ emu : s effekter pa lonebildningen ” ( the effects of the emu on wage formation ), appendix 2 to stabiliseringspolitik i valutaunionen ( stabilisation policy in the monetary union ), kommitten for stabiliseringspolitik for full sysselsattning vid ett svenskt medlemskap i valutaunionen ( the government commission on stabilisation policy for full employment in the event of swedish membership of the monetary union ), sou 2002 : 16. policy, there may be an increased tendency to choose shorter agreement periods. if membership were to lead to more stable inflation than now, the agreement periods could instead become longer, as it would be considered easier to predict nominal wage increases. the degree of wage flexibility is also affected by social norms - reductions in nominal wages are most often considered unacceptable. it appears that nominal wage reductions can only be implemented in extreme situations, for instance, if a company ’ s survival is at stake. emu membership might not comprise a sufficiently major change. econometric studies of how wage flexibility is affected by, for instance, erm membership give mixed evidence. wage formation thus represents an uncertainty factor. some studies indicate greater wage flexibility and others show no effect at all. the conclusion reached by the stabilisation policy committee is that swedish membership of the eurosystem most likely will entail wages becoming more flexible, but that changes could be limited. the riksbank has not yet taken a stand on the committee ’ s report ; we will be presenting our views on it in the autumn. the consequences of excessively high wage increases in the event of swedish membership of the eurosystem can be compared to “ learning the hard way ”, i. e. that sweden would lose competitiveness and suffer rising unemployment. this type of development could force an adaptation in wages in the long run. however, it risks being a costly route, particularly with regard to unemployment, which could stick at higher equilibrium levels than before. in other words, it is something that we should all endeavour to avoid. there is also a possibility that employers would resist demands for higher wage increases to a greater extent than before, as it would no longer be possible for a depreciation of the krona to help maintain competitiveness. increased mobility in the labour market?

mr backstrom asks the question “ is there a new economy? ” speech given by mr urban backstrom, governor of sveriges riksbank and chairman of the board of directors and president of the bank for international settlements, at a conference arranged by the stockholm chamber of commerce and veckans affarer, held in stockholm on 25 january 2000. * * * first a word of thanks for the invitation to attend this conference and discuss matters to do with the question “ is there a new economy? ”. besides considering that issue, i shall be looking at other factors that may affect economic developments in sweden, together with their implications for the future construction of monetary policy. monetary policy aims at promoting economic stability the riksbank ’ s primary concern is, as we all know, the future path of inflation. but our deliberations about how to keep inflation at a low and stable level can equally well be described as the riksbank ’ s endeavour, with the aid of the repo rate, to ensure that the economic trend in sweden continues to be favourable. this is because in most situations the task assigned us by the riksdag ( sweden ’ s parliament ) - “ to maintain price stability ” - amounts to acting so that the development of production and employment in sweden is as stable as possible. there have certainly been times when a tightening of swedish monetary and fiscal policy has led to an economic downturn and increased unemployment. as a rule, however, this has happened when price and wage increases had already taken off and the economy was therefore well on the way to becoming overheated. this can be likened to a driver who has to slam on the brakes because the car is travelling too fast and heading for the ditch. in such a situation, braking heavily is the only remaining chance of avoiding a serious accident. the best way of avoiding such a situation is continuously to adjust one ’ s speed - be it in a car or in economic activity - to the prevailing conditions. the speed limits on our roads are regulated, of course, by laws enacted by the riksdag and are also conditioned by the state of the road in question, the weather and other considerations. in the same way, the rate of economic growth is subject to economic laws and the prevailing conditions. driving schools teach us to keep an eye on the road well ahead so that we can adjust the car ’ s speed in good time. in that way, abrupt shifts can hopefully be avoided and, by