With regard to prices, inflation increased slightly more than expected in 2001. This can be partly explained by unexpected price increases on, for instance, fruit and vegetables; the price of these product groups will probably continue to increase slightly more than expected in the short term. Imported inflation has increased more than expected in both the producer and consumer areas, which could be due to the exchange rate’s effect on prices being slightly higher than assumed. However, price increases have also been broader and higher than expected for other goods and services. My view of the current situation So how do I assess the situation in which we find ourselves today? Firstly, I feel that confidence in the future and willingness to take risks appear to have recovered from the shock of 11 September. But what will happen to inflation? There are three reasons why inflation should fall this year. The first is that growth in demand and utilisation of resources were both lower than expected last year, which subdues price pressure for the near future. The second is that inflation expectations are disposed towards a decline in inflation, according to recent surveys. And the third is that the krona has appreciated slightly, which means a lower risk of imported inflation. On top of this, the effects of last year’s price rises on certain goods and services, including food and energy, will gradually abate. However, there is also a risk that the price rises will not abate on their own.
Specifically, our research indicates that when college tuition rises in a state, it leads to higher levels of student debt and a lower homeownership rate. These factors matter for inequality and social mobility, because increasing home equity is the major form of wealth accumulation for the great majority of American families. Thus, rising tuition and changes in the way that college is financed appear to have diminished the ability of higher education to lift people from poverty into the middle class. Of course, students’ reliance on debt and the returns from graduating vary across educational institutions. Of particular interest here is recent work by Raj Chetty and his co-authors showing that some colleges—some of which can be found in the CUNY and California state systems— appear to be much better at fostering economic mobility than others. In other words, they accept relatively large numbers of lower-income students while also producing large numbers of high earners, which means that these institutions facilitate considerable upward mobility. Learning exactly how they do it and how it can be replicated strikes me as a first-order question for further study. Recent research by Caroline Hoxby to assess differences in productivity across educational institutions makes important progress in that direction. In summary, academic research on the financing, costs, and returns of higher education is more important now than it has ever been. We are pleased to have many of those researchers participating in this conference.