is welcome, but it ’ s only the most tangible part, i. e. technological innovation, which is typically recorded. business model innovation is excluded. what ’ s more, investment in organisational capital and human capital are not recorded in national accounts, even though this will become ever more important part of capital growth as more jobs become automated and skill premia rise. even more complex is how to measure the value of digital innovations in terms of, say, the time they save for consumers or for national output. how should we value the ability to conduct banking via a smart phone? or get directions through google maps? 5 this isn ’ t just a question of the so - called “ consumer surplus ”, which is about welfare. it ’ s a question of whether improvements in quality are being properly valued. and as more and more services are provided in this intangible way, the likelihood of significant mismeasurement of the full value of goods and services in our economies rises. the flipside of digital services is that more activities that were previously part of the market economy can now be produced at home. a person wanting to arrange a holiday, for example, no longer needs to visit or phone a travel agent, but can research and book the whole trip herself online. the sales of hotels and flights still contribute to gdp. but the work formerly done by the travel agent, which has now effectively been outsourced to the consumer, disappears. this also raises questions for how we measure productive activity. these examples highlight the difficulties of understanding how the economy is developing – let alone estimating its potential growth rate. to be sure, we should aim to rise to that challenge and update our statistics to capture such changes. but clearly, as policymakers, we also have to be humble about what can know. and in that context, imagining that we can reliably hold the output gap around zero is simply hubris. see : olivier blanchard, eugenio cerutti and lawrence summers, inflation and activity – two explorations and their monetary policy implications ”, imf working paper wp / 15 / 230 ( november 2015 ). see : erik brynjolfsson and andrew mcafee, the second machine age : work, progress, and prosperity in a time of brilliant technologies ( w. w. norton & company, 2014 ), especially chapter 8. https : / / www. gov. uk / government / uploads / system / uploads / attachment _

william c dudley : the us economic outlook and the implications for monetary policy remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at money marketeers of new york university, new york city, 7 september 2017. * * * good evening. it is a pleasure to have the opportunity to speak at this money marketeers event. in my remarks, i will focus on two topics : 1 ) the economic outlook and the implications for monetary policy, and 2 ) the fed ’ s balance sheet normalization process, which is likely to begin relatively soon. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee ( fomc ) or the federal reserve system. 1 overall, the economy remains on a trajectory of slightly above - trend growth, which is gradually tightening the u. s. labor market. over time, this should support a rise in wage growth. when combined with a firmer import price trend — partly reflecting recent depreciation of the dollar — and the fading of effects from a number of temporary, idiosyncratic factors, that causes me to expect inflation will rise and stabilize around the fomc ’ s 2 percent objective over the medium term. in response, the fed will likely continue to remove monetary policy accommodation gradually. but, the upward trajectory of the policy rate path should continue to be shallow, in part because the level of short - term interest rates consistent with keeping the economy on a sustainable long - run growth path is likely to be considerably lower than it was in prior business cycles. the process of balance sheet normalization — in which an increasing proportion of maturing treasuries and agency mortgage - backed securities ( mbs ) repayments are allowed to run off the fed ’ s balance sheet — should also exert some monetary policy restraint over time. but, i believe this impact will be quite modest. not only is this shift in policy now widely anticipated, but we have also seen that the impact on the level of long - term interest rates has been small as expectations have adjusted. economic outlook so, why do i anticipate that the economy will likely continue to grow at a slightly above - trend pace? the fundamentals supporting continued expansion are generally quite favorable. low unemployment, sturdy job gains, and rising wages — even at a pace below previous expansions — are lifting personal income. household wealth has been boosted by rising home and equity prices, and