I got to address the annual meeting of Business Iceland today on the topic of “On fiscal and monetary policy in Iceland”. The main theme was about what to do about the high economic volatility.
The main writeup is here, but outline of the talk is:
- Iceland has the sixth most volatile economy in the OECD;
- The economy is primarily driven by return on natural resources not human capital;
- This is not necessarily a cause for concern;
- If it is, the authorities need to implement countercyclical policies that need to target:
- The labor market;
- The financial market;
- Fiscal policy;
- Monetary policy.