For open economies, though, our standard of living is affected not just by the physical output we can obtain from our resources of labour and capital, but also by the purchasing power of that output over things we want to have from the rest of the world. This is what the terms of trade is measuring.
That’s why I want to warmly thank the Central Bank of Malta for organising this conference and Governor Mario Vella for taking the initiative to create an interdisciplinary European research network to look into the notion of populism in central bank communication.