This results in lower production costs. 6  BIS Review 47/2007  The strong growth in labour productivity does not seem to reflect an increase in the real capital behind each person-hour worked, but rather a considerable improvement in labour and capital efficiency. 2 Intensified competition in product markets may have contributed to the subdued rise in prices. New operators have entered markets that were previously fairly sheltered from competition, for example in the grocery trade, building materials, telecommunications, banking and insurance. With general confidence that inflation will be kept in check and that petroleum revenues are only gradually phased into the economy, low import prices, high prices and good market opportunities for our export goods, an ample supply of foreign labour and high productivity growth have made it possible to combine high growth with low inflation. It is possible that some of the driving forces that have boosted the growth potential of the Norwegian economy and restrained inflation may now diminish. Prices for imported goods are now falling at a slower pace. The shift towards imports from low-cost countries was less pronounced in 2006 than in previous years. The rise in prices for oil and other commodities over several years has resulted in a somewhat faster rate of increase in producer and export prices among our trading partners. Measured in foreign currency, prices for imported consumer goods rose in 2006.
Actually, one essential objective of macroprudential supervision may be to "regulate" (not in the legal sense, but economically) the aggregate level of risk appetite inside the financial system. This unavoidably involves some degree of discretionary judgement and intervention. Combining the two components of macrosupervision (systemic and macroeconomic) with the two approaches (automatic and discretionary) produces an interesting classification, which is presented in the table below:  BIS Review 37/2009  3  Purpose Systemic risk  Adjustment to macroconditions  Mechanisms • buffers (capital and/or liquidity) • Loan to Value ratios Automatic  • accounting framework • stress tests  Discretionary  • pillar II of Basel 2  • time varying ratios  capital  • dynamic provisioning  • discretionary adjustments to capital ratios, provisions or margin requirements  Institutional challenges The discretionary approach to macrosupervision raises important institutional issues. First, who makes the judgment? And should that body be independent or not? There is a good case for putting Central Banks in charge. If one takes an historical perspective, it is striking that the mandates and missions of Central Banks have taken major turns following financial crises. Central Banks have an informational advantage (or at least no disadvantage) in judging the cyclical position. They have an incentive to act, because macroprudential supervision alleviates the burden on monetary policy, and because they need monetary transmission mechanisms to work. So they clearly should have a pivotal role in the process. But they are not alone in caring about financial stability.