The figures I have just mentioned suggest that, overall, structural reforms in the labour market still need to be high on the agenda. This appears even more urgent if we consider that in the past Europe’s growth performance has been, and will be in the future (all else equal), increasingly constrained by its low population growth rate and population ageing. Indeed, since the mid 1990’s, population in the euro area has been growing at a yearly rate of just 0.4% compared to 1.1% in the US. However, what is worrisome is that at the same time, the gap in population growth has been even larger with regard to growth in the working age population. The working age population grew on average by 0.3% per year in the euro area over the period 1995-2007 compared to 1.2% in the US (1.1% in Spain). Finally, turning to labour productivity, while during the 1980s and the first half of the 1990s, hourly labour productivity in the euro area grew on average by 2.3%, it slowed down to 1.3% between 1995 and 2007. Similarly, over the same period hourly labour productivity growth in Spain decelerated very significantly from 2.5% to 0.5%. By contrast, US hourly labour productivity growth rose from 1.4% to 1.8%. The positive labour supply shock, reflected by the increase of employment particularly in the unskilled segment of the labour market experienced in the euro area as well as in Spain has,  2  Average to 2007Q3. 3  Source Eurostat.
An additional strength of the Chilean economy in the context of emerging countries, which I think is very important for the topic to be discussed during these days, is the relevance of institutional investors, particularly pension funds. Their role in financial stability has gone well beyond the development of derivatives markets. They have contributed to the deepening of capital markets, portfolio diversification, and the development of new financial products, among other features. Moreover, with their peso-denominated liabilities and large foreign position, which is around 35 percent of GDP in the case of pension funds, they have facilitated the conduct of monetary policy being an important source of liquidity in foreign currency when needed. Acknowledging this, the financial regulation has gradually expanded the scope of possible investments for institutional investors, including raising the limits for investments abroad. Let me finish by thanking the distinguished group of economists that have joined us to present and discuss issues concerning monetary policy and financial stability. I would like to thank also Alvaro Aguirre, Markus Brunnermeier, Diego Saravia and Catalina Larraín for putting together the program, and Paloma Navarro and Carola Besa for helping with the organization. 6