##s made at the beginning of 2005 proved to be inaccurate. ii. 2 financial markets in the global fixed income markets ( see slide 6 ), the flattening of yield curves throughout the second and the third quarters of 2005 has been something of a puzzle. more recently, worries about global inflation, mainly driven by high oil prices, seem to have reversed the decline in long - term bond yields, at least temporarily. the low level of us ten - year bond yields in particular remains a conundrum that is difficult to reconcile with underlying macroeconomic fundamentals. at the same time, and as a corollary, concerns about the risk of an unexpected and abrupt upturn in these yields have remained. the chart on the top left of slide 6 illustrates the puzzle by plotting the evolution of the us 10 - year bond yield against the consensus expectations on us nominal gdp growth ten years ahead, a proxy for the level of bond yields consistent with expected future fundamentals. in “ normal ” circumstances, the two would be expected to remain rather close to each other. the chart shows, however, that for the us, since early 2002 the bond yield has been persistently lower than the expected future growth rate of nominal gdp. in the euro area, as shown in the chart on the bottom left on slide 6, although the 10 - year bond yield has also declined below the 10 - year nominal gdp growth expectations, the margin is substantially narrower. the low levels of bond yields can be partly explained by increasing demand by institutional investors, such as insurance companies and pension funds, for long - term bonds. ageing populations and increasing private provisioning of pensions in many euro area countries, as well as accounting changes and balance sheet repair, have forced financial institutions to resort to longer - term bonds in order to correct maturity mismatches in their balance sheets. the chart on the right of slide 6 illustrates how net purchases of long - term bonds relative to quoted shares has sharply diverged since 2002. insofar as the declining bond yields reflect such structural factors, the potential for a reversal of the trend, should it happen, could take place more gradually than previously feared. however, it should be noted that other factors have also affected the patterns of global portfolio behaviour, which led to an unusual increase in the net demand for long - term bonds and drove down risk premia and therefore bond yields. ii. 3. the balance sheets of euro area corporations and households let me now briefly discuss developments in the euro

, 2015. 4 calculations based on estimation results from abbritti, m. and weber, s. ( forthcoming ), “ reassessing the role of labor market institutions for the business cycle, ” international journal of central banking. 5 abbritti, m. and mueller, a. ( 2013 ), “ asymmetric labor market institutions in the emu and the volatility of inflation and unemployment differentials, ” journal of money, credit and banking, vol. 45 ( 6 ), pp. 1165 - 1186. 6 see blanchard, o. and giavazzi, f. ( 2003 ), “ the macroeconomic effects of regulation and deregulation in goods and labor markets ”, the quarterly journal of economics, vol. 118, august, pp. 879 - 907. 7 banerji, a. et al. ( 2017 ), “ labor and product market reforms in advanced economies : fiscal costs, gains, and support ”, imf staff discussion note, march. 8 simulations based on ecb staff research ( masuch, k., moshammer, e. and pierluigi, b. ( 2016 ), “ institutions, public debt and growth in europe ”, working paper series, no 1963, ecb, frankfurt am main, september ) show 4 / 5 bis central bankers'speeches that enhancing institutions towards average practices in the eu could lift long - term real gdp per capita for some countries by between 5 % and 18 % ( in the course of about ten years ). 9 sondermann, d. ( 2016 ), “ towards more resilient economies : the role of well - functioning economic structures ”, working paper series, no 1984, ecb, frankfurt am main, november. 10 for an early example of this view, see gordon, r. ( 1996 ), “ macroeconomic policy in the presence of structural maladjustment ”, nber working paper series, no 5739, national bureau of economic research, september. 11 banerji, a. et al., op. cit. 12 between the first quarter of 2015 and the first quarter of 2017, see eurostat ’ s european union labour force survey. see also sestito, p. and viviano, e. ( 2016 ), “ hiring incentives and / or firing cost reduction? evaluating the impact of the 2015 policies on the italian labour market ”, questioni di economia e fin