Although it is not easy to reconcile the recent sharp falls in confidence in the US and the relative stability of stock market prices, it would appear that investors generally have taken comfort from the Federal Reserve's ability and willingness to react to the latest data, and take appropriate action. The second cloud on the horizon is the risk to emerging market economies posed by the US slowdown and the unwinding of imbalances in the industrialised world. In some emerging markets, especially those in East Asia exporting high technology products to the United States, the immediate outlook is for weaker economic growth. But for other countries, especially in Latin America, the fall in US interest rates and in the dollar against the euro will mitigate the direct loss of export demand. But the major concern is to avoid another financial crisis, of which there have been too many in the past five years. From Mexico in 1995, through the Asian crisis in 1997 and Brazil in 1999, and, more recently in Argentina and Turkey, sudden reversals of short-term capital flows have created financial crises. In many cases, these crises have proved devastating to the citizens of the countries affected. 2  BIS Review 16/2001  The existence of deep and liquid international capital markets offers opportunities for greater risk diversification by both borrowers and lenders. But it also increases the risk of contagion from one country to another affected by an outflow of short-term debt finance.
As highlighted in a recent statistical study, the growth of the “sharing economy” is creating new opportunities for self-employment: people who work on a shift pattern in a retail store might spend their off-days driving an Uber taxi. This kind of “micro” activity might be less simple to measure than the services of traditional taxi firms, as it may be less likely to show up in earnings data. 4 Measuring investment in a digital economy is equally tricky, as much of it concerns intangible capital. We have now started classifying R&D as investment, which is welcome, but it’s only the most tangible part, i.e. technological innovation, which is typically recorded. Business model innovation is excluded. What’s more, investment in organisational capital and human capital are not recorded in national accounts, even though this will become ever more important part of capital growth as more jobs become automated and skill premia rise. Even more complex is how to measure the value of digital innovations in terms of, say, the time they save for consumers or for national output. How should we value the ability to conduct banking via a smart phone? Or get directions through Google maps? 5 This isn’t just a question of the so-called “consumer surplus”, which is about welfare. It’s a question of whether improvements in quality are being properly valued. And as more and more services are provided in this intangible way, the likelihood of significant mismeasurement of the full value of goods and services in our economies rises.