Without aiming to be exhaustive, I should like to highlight some of the key priorities for reform in three main areas, namely: •  Getting more people into work,  •  Increasing competition,  •  And finally, supporting an innovative environment. Getting more people into work First of all, well-functioning labour markets are indispensable in fostering higher economic growth. The differences in labour market developments, especially with regard to the level of labour utilisation, between the US and Europe has prompted some economists to suggest the existence of a “European model” and a “US model”, related to the trade-off between labour and leisure 6 . One view is that the lower levels of GDP per capita in Europe reflect a European preference for more leisure time. However, we should bear in mind that lower participation rates are not necessarily associated solely with personal preferences, but are also triggered by the legal and regulatory environment, tax systems and social institutions. Necessary measures to increase labour utilisation or labour supply include the reform of tax and benefit systems in order to increase incentives to work. The use of flexible forms of work such as part-time and temporary work may also provide further working incentives 7 . High unemployment rates in the euro area and in particular unacceptable high youth unemployment rates clearly suggest the need to spur not only labour supply but also labour demand. There is a need to reduce labour market rigidities restricting wage differentiation and flexibility.
Svein Gjedrem: The conduct of monetary policy Introductory statement by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the hearing before the Standing Committee on Finance and Economic Affairs of the Storting (Norwegian parliament), Oslo, 28 September 2004. The text below may differ slightly from the actual presentation. The statement is based, among other things, on the assessments in Norges Bank’s Annual Report for 2003 and Inflation Report 2/2004. The  Charts in pdf-format can be found on the Norges Bank’s website. *  *  *  I would like to take this opportunity to thank the Storting for again inviting Norges Bank to appear before this Committee to report and answer questions on monetary policy in connection with the Storting’s deliberations on the Government’s credit report. Inflation-targeting countries Price stability, in the sense of low and stable inflation, is the objective of monetary policy in a number of countries. Historical experience from Norway and other countries has shown that high inflation has resulted in unstable output and employment. In addition, a fall in the price level will often accompany a period of decline. The first inflation target was introduced in New Zealand in 1990. Canada followed in 1991, the UK in 1992, and Sweden and Australia in 1993. In Norway, the government issued a regulation introducing an inflation target in 2001. Monetary policy in euro area countries and Switzerland is also aimed at price stability, even though this is not referred to as inflation targeting in these countries.