We have gained an increasing understanding that how we finance postsecondary education has significant effects on a variety of critical economic outcomes, including economic growth and inequality. For example, our research suggests that higher student debt and delinquencies reduce household formation and depress homeownership. But there are many important questions still left unanswered. What is the relationship between the amount and type of educational investment that people make and their outcomes? What attributes are associated with borrowers who are more successful at  1  2  Payback Time? Measuring Progress on Student Debt Repayment. BIS central bankers’ speeches  repaying their student loans? Are there particular types of degrees that are associated with better performance with respect to student debt repayment or with better living standards earlier in life? What are the best interventions to help borrowers avoid the consequences of delinquency and default, and to limit any default costs to taxpayers? Do borrowers who use programs like income-based repayment eventually succeed in paying off their debts? How do income-based repayment programs affect important decisions such as labor supply, consumption and household formation? These are important questions for the nation, as the human capital of our citizens is far and away our most important asset, and student loans are an important mechanism for financing needed investments in that asset. But it is very hard to answer these questions with existing data.
We expect the fall in commodity prices, which is driven by the weak global demand, to bring consumer inflation down, and the awaited moderate pace of domestic demand to restrain the upside risks. Thus, we believe that underlying inflation will move downward in the forthcoming period. Distinguished Guests, Now, I would like to give a brief account of developments in economic activity and the shortterm outlook on which the inflation forecasts are based. According to the GDP data of the second quarter of 2014, economic activity was relatively weaker compared to the outlook we presented in the July Inflation Report. In the second quarter, we saw that industrial production remained virtually unchanged quarter-on-quarter, while national income posted a decline after eight quarters in seasonally adjusted terms (Chart 13). This decline was mostly attributed to the agricultural sector, which made a 0.3 point negative contribution to quarterly growth. Therefore, national income growth lagged behind industrial production growth (Chart 14). 6  BIS central bankers’ speeches  Industrial production, which grew by 1.1 percent in the July-August period of 2014 compared to the preceding quarter, contributed to growth in the third quarter. On the other hand, we may see some decline in the agricultural value added. Thus, there are signals that GDP growth may fall short of the industrial production growth in this period as well. Factors like the slowdown in the European economic growth and geopolitical developments led the external demand to decelerate, inducing a marked slowdown in the growth of exports excluding gold (Chart 15).