This means that the number of hours worked will increase by 0.8 instead of 0.4 per cent a year. Public finances would then be improved by SEK 45 billion, which could be used for reforms - or for repayments on the central government debt and thus create increased scope for future borrowing. If immigrants participated in the working force to the same extent as Swedes, it would provide a further contribution to the number of hours worked of 0.1 percentage points a year. Monetary policy and wage formation The labour supply thus comprises a problem both in the long term and closer to hand. If this cannot be resolved through structural measures that increase the labour supply - e.g. through less sick leave being taken, increased working hours per employee or by labour force immigration - the Riksbank may  BIS Review 17/2003  3  be forced to subdue demand in the economy by raising the interest rate. The labour market’s ability to manage wage formation will be tested as early as next year, when actual growth is supposed to be in line with potential growth. Of course, we do not believe that resource utilisation will put any great pressure on prices and wages so soon, but as economic activity strengthens, greater demands will be made on social partners to show restraint. The Municipal Workers’ Union’s demand for relative wage changes could also entail a problem in terms of potential contagion effects.
Looking at these patterns over time paints a somewhat more optimistic picture (Chart 4). There is clear evidence of economics having become more cross-disciplinary during the course of this century. Once finance is taken out of these estimates, however, economics continues to lag. And alternative metrics, such as the degree of rigidity in hierarchies and gender diversity, paint economics in a less favourable light (Fourcade, Ollion and Algan (2015)). Despite progress, it is difficult to escape the conclusion that economics remains an insular, self-referential discipline. 9  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  9  The economics profession’s intellectual bloodline is purer than in most other disciplines. In some respects, it is a source of strength that the workhorse economic model is a thoroughbred. That quest for purity also contributed importantly, however, to this workhorse falling at the first meaningful fence put in its path. This suggests it is probably as good a time as any to consider mixing the intellectual bloodline, just as physics and other of the natural sciences have done. Agent-Based Models (ABMs)  Against this backdrop, what other disciplines and approaches might be productive alternative lines of enquiry? One potentially promising strand is so-called agent-based modelling. Agent-based models (ABMs) are interconnected systems of individual “agents” who follow well-defined behavioural rules of thumb. What makes these models interesting is that these agents are heterogeneous and interactive. In other words, these models relax one of the key assumptions of the standard model – a single, representative agent.