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The central bank conference at Jackson Hole usually brings news about the Federal Reserve, but this time round it was the same story from Chair Yellen that the unemployment rate isn't everything. Instead, ECB President Draghi seized centre stage. By pointing out that the participation rate explains much of the difference between US and Eurozone unemployment, Draghi made clear that monetary policy is no longer about just inflation and unemployment.
A closer look at the Global Financial Crisis reveals it may not have been that global after all. Asian Emerging Markets managed to remain relatively stable throughout the crisis despite external volatility, largely due to robust credit growth and an influx of excess global liquidity. Now credit is still growing but the economies are slowing.
In the UK, wage growth has remained weak despite the strong economy. Since 2011, the expected relationship between higher wages and higher employment has broken down. Is this to do with an increased supply of labour or weak productivity growth, or simply that it is taking longer for higher employment to translate into higher wages?
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