we could not answer 30 years ago. large dynamic stochastic general equilibrium models – the ones that failed to incorporate financial frictions – require the use of involved numerical methods to produce an estimate of the posterior distribution when confronted with the data. advances in computing power have allowed the estimation of such models, greatly expanding the tools central banks have at hand to analyse the economy. yet, current conventional estimation methods still imply many hours, or even days, of estimation of more complex models that include household and firm heterogeneity. your generation will push out the modelling frontier even farther. no doubt, parallel and cloud computing, machine learning and artificial intelligence are already transforming the economics profession. you will all need to keep up with the pace of technological progress. economics is life - long learning. many of the methods and software packages you learn today will be outdated by the time you are mid - way through your career. at the same time, big data and richer and timelier datasets will help improve the input to our models. the “ billion prices project ”, which was launched by the massachusetts institute of technology ( mit ) in 2008, publishes daily online price indices for more than 20 countries where price information is collected automatically through machines from hundreds of retailers. i would hazard a guess that you will look back with pity on the current generation of economists who have only just started using online and scanner data to improve our short - term forecasts. the sky is the limit. and, fourth, structural changes perhaps contribute most to making the economics profession exciting, but also challenging. if you had been working in the ecb ’ s monetary policy department in 2014, you would have more than likely contributed to the work on the term structure models i have alluded to previously, or on financial frictions and euro area heterogeneity. but if you come to work in the ecb ’ s monetary policy department in 2021, you will probably be working on the consequences of fintech for financial intermediation, or on the impact of trade wars and dislocating global value chains on price and output spillovers in the global economy. your studies today will equip you with the tools to approach such challenges in the future. but you will have to use these tools very flexibly and with an open mind. climate change is perhaps the most far - reaching of the challenges facing your generation. it is no coincidence that william nordhaus was awarded the nobel prize in economic sciences last year for

integrating climate change into macroeconomic analysis. central banks are lagging behind the curve and have only just started incorporating the effects of climate change into their models. your generation will need to be the driving force behind these efforts. central banks cannot be at the forefront in fighting climate change. this is and should remain a political task. but they can help within their mandates. low, and even negative interest rates, have implicitly contributed to shorten the “ tragedy of the horizon ”. that is, lower discount rates have increased the net present value of those future cash flows that are more likely to be affected by climate change. at any rate, climate change will affect the conduct of monetary policy in one way or another. without further mitigation, for example, it will become increasingly difficult for central banks to disentangle the variation in the data underlying the assessment of the medium - term inflation outlook. consider the german car manufacturing sector, which has experienced a notable decline in activity over the past 18 months or so. this decline started after the implementation of new carbon dioxide emission standards. but it coincided with a broad - based decline in global aggregate demand due to growing uncertainties about global trade and brexit. these effects have very different implications for central banks. monetary policy is the appropriate tool to counter weakness in demand so as to keep inflation at levels that are in line with our aim. but monetary policy is not the right tool for addressing a decline in production that reflects a change in consumer preferences, away from fossil fuel - driven cars and towards electrical vehicles. central banks will face such identification issues more often in the future. and they will need to think about how they incorporate green and sustainable considerations in their investment behaviour. the research field is wide and open in this area. but it is also full of challenges. for this reason, and because climate change is an emergency, work on modelling climate change will require strong international collaboration across national and international organisations. if we want to be successful, then we need to start now. conclusion no matter what you take home from tonight, and with this i would like to conclude, as you go out into the world and start your careers, take with you the great experiences and the network of people that this university has on offer. life and economics is about people. keep those friendships going, not only for your careers but for your own wellbeing and to help you become exemplary members of our societies. and stay humble and critical. equations and models often induce