2  BIS Review 130/2010  models, 3 principal component methods 4 or models where one estimates a flexible-price output gap. 5 Resource utilisation can also be measured by the employment rate, unemployment and other measures. I will return to a number of these measures later. What has happened to GDP in connection with the crisis? During the years prior to the financial crisis, productivity growth in Sweden was rapid. At earlier conferences here in Saltsjöbaden, I have pointed to possible causes of the rapid growth in productivity. 6 Examples of structural causes are deregulation of product markets, increased competition through globalisation, increased use of information technology or – the theme of this year’s conference – a rising level of education and a changed work structure. However, productivity also varies over the business cycle. In June 2007 – before the financial crisis began – our assessment was that productivity growth would be lower in the coming years. But we did not foresee that productivity would fall as heavily as it did. In June 2007, we were assuming that productivity would increase by a total of around 5 per cent during the years 2008 and 2009. Instead, it fell by around 5 per cent. The main reason for this fall was an exceptionally steep decline in demand. GDP fell by a total of 5.5 per cent during the years 2008 and 2009, instead of increasing by an almost equivalent percentage, as predicted.
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