Second, there is considerable uncertainty about the level of productivity growth at any point in time. Third, there is what economists call the Knightian uncertainty with respect to the choice of the appropriate modelling approach to measuring potential output (Mishkin, 2007). Fourth, in India, we have an additional constraint by way of lack of comprehensive and consistent data on employment.
Having said this, I am fully satisfied that even in a financial system which is largely foreign owned, such as in the New Zealand financial system, there is very considerable scope to use market disciplines to promote improved risk management by the subsidiaries and branches of foreign banks.