but also of its composition, especially the tax burden and the share of public investment. so we should not see fiscal policy as solely a macroeconomic tool, which is only available to countries with strong public finances. we should also see it as a microeconomic policy tool that can enhance growth even when public finances need to be consolidated. third, it matters for monetary policy whether the right structural policies are in place. structural reforms can help limit the depth and duration of shocks, which in turn supports the anchoring of inflation expectations and keeps real interest rates low. [ 5 ] such reforms can also reduce the transmission lag of our measures, since a more flexible, more responsive economy is likely to transmit monetary policy impulses faster. [ 6 ] and they produce higher potential growth, which leads to higher investment and hence a higher equilibrium real rate. that creates the conditions for the central bank to return to conventional interest rate policy as the means to deliver price stability. in the euro area, many structural reforms have been implemented in recent years, and especially in those countries worst - hit by the crisis. the benefits can now be seen. but there are many more benefits still to aim for, and so much more needs to be done. finally, uncertainty over the institutional stability of the euro area also matters for monetary policy, since it too can slow down the transmission of monetary policy. firms that lack sufficient visibility over their operating environment over the years to come may understandably choose to deter or even abandon investment plans. that is especially so when the return on those investments depends strongly on the size and openness of the market provided by the euro area and the european union. this has been clear in the past when the future of the euro area has been called into question. and that sort of uncertainty not only impacts on firms that borrow to finance real investment. it can also affect the saving rate of firms and households, as the perception of higher risk can call for higher precautionary savings. this would obviously run against the efforts of monetary policy to stimulate higher investment and consumption. so i will only note once more the critical need to restore clarity and confidence on the institutional setup of the euro area. we know that the current setup is incomplete. there is a large degree of agreement on what its shortcomings are, and many proposals have been put forward on how to overcome them. progress in this field is necessary for the long - term, but it is also relevant for the short - term because of its effect

200th anniversary of the oesterreichische nationalbank, vienna, 2 june 2016. for a fuller explanation of this point see praet, p. ( 2016 ), “ the ecb's fight against low inflation : reasons and consequences ”, speech by at luiss school of european political economy, rome, 4 april 2016. for evidence on disruptions in monetary transmission see ciccarelli, m., maddaloni, a., and peydro, j. - l. ( 2013 ), “ heterogeneous transmission mechanism : monetary policy and financial fragility in the eurozone ”, economic policy vol. 28, issue 75, july 2013. for evidence on the impact of the composition of fiscal adjustment on output see alesina, a., favero, c., and giavazzi, f. ( 2014 ), “ the output effect of fiscal consolidation plans ”, journal of international economics, forthcoming. for an elaboration of this argument see cœure, b. ( 2014 ), “ structural reforms : learning the right lessons from the crisis ”, speech at the bank of latvia economic conference 2014, riga, 17 october 2014. for more on this point see draghi, m. ( 2015 ), “ structural reforms, inflation, and monetary policy ”, introductory speech at the ecb forum on central banking, 22 may 2015. for more on this phenomenon see ball, l. ( 2009 ), “ hysteresis in unemployment : old and new evidence ”, nber working paper 14818, march 2009. see for example arulampalam, w., gregg, p., and gregory m. ( 2001 ), “ unemployment scarring ”, the economic journal, vol. 111, november 2001. the european commission estimates euro area structural unemployment to be 9. 7 % in 2016. see for example riley, r., rosazza - bondibene, c. and young, g. ( 2015 ), “ the uk productivity puzzle 2008 – 13 : evidence from british businesses ”, bank of england staff working paper 531. see also bloom, n., floetotto, m., jaimovich, n., saporta - eksten i., and terry, s. j. ( 2014 ) “ really uncertain business cycles ”, stanford university mimeo. gamberoni e., giordano, c., and lopez