True, any non-observable variable becomes visible at some point in the form of a disequilibrium in other observable variables, among which the twin deficits (budget deficit and current account deficit). Yet, when this happens, it is usually too late for monetary policy. Therefore, we drop the non-observable variables such as output gap, inflationary expectations and NAIRU – at least when the task at stake is to explain inflation in a post-crisis environment. Instead, we choose to use observable variables only. Since wage is a measurable, reliable, accounted for, and comparable indicator, we focus on a wage Phillips Curve where consumer prices inflation rate is explained by the difference between past wages and current wages. Second, we should make a fundamental change of paradigm from flow to stock. To understand the consumers behavior, which in turn influences inflation, we introduce the concept of a cumulative wage gap – meaning the cumulative gap between current wage and a peak reference wage value in the past. The permanent income hypothesis is fundamentally flawed in times of crisis, because of uncertainty of future income. The only certain reference value lies in the past, not in the future: and that is why current consumption is influenced by past income. Third, we should allow for the Phillips Curve to be non-stationary: it moves over time, and it is absolutely normal to do so.
Women are now also part of the increased mobility of talent that is able to relocate to different parts of the country or to venture abroad. Increasingly, women are now rising to senior and key top management positions in both private corporations and in government, although we are still less than where we should be. The changing corporate cultures, the shift away from hierarchical structures, in fact, are to the advantage for women professionals. We have seen these changes taking place in international corporations, where the previous power structures have resulted in limited opportunities for women. Changes in corporate cultures towards more collegial environment have inculcated organisational values and behaviours that have been more conducive for increased opportunities for women. Let me turn to the implications of an environment of constant change and transformation. Indeed, as we go forward, we can expect this pace of change to intensify. To succeed in this ever changing environment, there needs to be an awareness and an understanding of the nature of these changes and its radical implications and consequences. Survival in the modern economy requires the adoption of new approaches and strategies. Approaches that have brought previous successes will no longer become relevant. It will require radically different ways of doing things. Prospering on a short-term business trend without developing capabilities and competitive positions will risk the future of any business. The new environment requires strategies that aim to secure durability and sustainability. This new environment will be characterised by increasing competitive pressures.