fairly mixed, possibly reflecting to some extent the uncertainty surrounding the data on global output. 8 and let me stress that here the uncertainty does not only relate to the problems of estimating the output gap – an issue on which i ’ m sure my colleague at the ecb ’ s governing council athanasios see for instance, fisher, r. w. ( 2005 ), “ globalization and monetary policy ”, warren and anita manshel lecture in american foreign policy, harvard university, 3 november. see the economist ( 2005 ), “ a foreign affair ”, economics focus, 20 october, and business week ( 2006 ), “ a narrow window on the world ”, 5 june. for instance, evidence in support of this hypothesis for sixteen industrialised countries and the euro area has been recently provided by borio, c. and a. filardo ( 2007 ), “ globalisation and inflation : new cross - country evidence on the global determinants of domestic inflation ”, bis working papers no. 227. however, their results for a number of countries have been challenged by ihrig, j., kamin, s., lindner, d. and j. marquez ( 2007 ), “ some simple tests of the globalization and inflation hypothesis ”, board of governors of the federal reserve system, international finance discussion paper no. 891. similarly, calza, a. ( 2008 ), “ globalisation, domestic inflation and global output gaps : evidence from the euro area ”, ecb working paper no. 890, finds limited evidence in support of the “ global output gap hypothesis ” for the euro area. orphanides would have quite a few words to say – but, even more fundamentally, to the measure of world output itself. 9 a pre - requirement to assess this hypothesis more thoroughly and, more generally, to assess how global macroeconomic conditions affect domestic inflation, would be to have quarterly world gdp statistics professionally compiled by the statistical department of an international organisation with a broad geographical membership. in particular, the priority would be to have a quarterly world gdp indicator at constant prices, seasonally adjusted and broken down by investment, private and government consumption ( as world exports equal world imports ). with a timeliness of 60 days, coverage would account for about 80 % of world gdp ( both in current exchange rates and in purchasing power parities ), which typically allows for the compilation of sufficiently reliable growth rate estimates at a national level. another area in which there

this budget. do you find that disappointing? let ’ s wait to see the amount, which can build up over several years. the budget should be large enough to deal with an economic shock in a euro area country. what do you see as the priorities for improving the euro area? first, we need to strengthen the single market, complete the banking union and the capital markets union. these are very technical projects but they can boost growth and stimulate investment and innovation. next, the euro area countries should be able to absorb shocks without things going badly wrong, as happened in greece, portugal, ireland, spain and cyprus. how do we get to that point? in france people still think the solution lies in new taxes or in more european spending. there may well be a place for such measures, as discussed, but the first line of defence is that each country should make its economy more resistant and restore the fiscal room to manoeuvre that 1 / 3 bis central bankers'speeches has now disappeared. yet we have to admit that our budgetary rules have not attained their objective. at present, virtually the only country with fiscal buffer is germany. france needs to keep reducing its deficit to below 3 % of gdp in order to restore its resilience to shocks. and what else is needed? the ecb needs a well - functioning political framework, which requires coordination and trust between the member countries. one has to rebuild this trust, which has been damaged by ten years of crisis. it is of vital importance to the ecb that the different countries have a shared vision of their future and are able to work together. it ’ s not up to us to steer euro area politics. what about the euro area minister of finance? the franco - german roadmap doesn ’ t mention this at all … let ’ s not put the cart before the horse. a euro area finance minister would imply the existence of a common political area, which i think is essential, but we aren ’ t there yet. the starting point is the eurogroup, with its toolbox, including the european stability mechanism ( esm ), the european rescue fund. germany and france are proposing to strengthen it by enabling it to intervene fast in the event of a banking crisis or to help a state before it ’ s too late, and that ’ s a good thing. by the way, at the ecb we don ’ t much like the term “ european monetary fund ”, which creates confusion both with the im