needed, once the results of the comprehensive assessment are known. the ultimate aim of the exercise is to enable euro area banks to strengthen their capital base and thereby substantially increase their credit provision capabilities. together with the policy measures taken by the ecb since june 2014 to further enhance the transmission of our monetary policy and support the provision of credit to the real economy, this should lead to a rebound in investment demand and growth. to make it sustainable, economic policy makers bis central bankers ’ speeches in the euro area will need to do their part to create an environment conducive to sustainable growth. i fully share the call of the managing director in her global policy agenda that addressing structural deficiencies are a priority to unlock growth, at the global level and definitely also in the euro area. bis central bankers ’ speeches

. as pointed out by lucas and sargent in a paper presented in 1978 at a conference organised by the boston fed, 8 the inflation of the 1970s represented, under this respect, a sort of large - scale experiment for the old consensus. for lucas and sargent the verdict of this experiment was clear : the “ halcyon days ” 9 of post - keynesian macroeconomics, with its belief in the exploitability of the phillips trade - off, were gone for ever. over subsequent years, and until mid - 1990s, the phillips curve essentially disappeared from frontier research. alienated by the disappointing performance of the phillips curve, and following the lead of kydland and prescott, 10 frontier researchers were preoccupied with building flexible - price general equilibrium models driven by technological impulses. within the new framework, there was indeed no place for a phillips curve to speak of. the revival of interest in the phillips curve started in the 1990s, and was driven by two separate developments. from an empirical standpoint, work concentrated on the forecasting performance of “ generalised phillips curve models ’ comprising, in lieu of unemployment, activity indicators extracted from dynamic factor analysis. compared to traditional benchmarks, this line of research has shown that generalised phillips curve models exhibit a remarkable improvement in forecasting ability. 11 on the theoretical front, there was a growing realisation that the research program launched by kydland and prescott was facing fundamental problems. notably, the absence of nominal rigidities in a real business cycle setting implied – among other things – that the new paradigm was fundamentally incapable to reproduce the key macroeconomic facts uncovered by the structural var literature : first and foremost the sluggish and drawn - out response of key variables such as inflation and output growth to monetary policy innovations. the dsge research program, which started around mid - 1990s, 12 was motivated by the need to reproduce key macroeconomic stylised facts within otherwise standard general equilibrium business cycle models. the introduction of various nominal and real frictions in such models has spawned a modelling effort and a flourishing of an econometric work which is, to this day, continuing unabated. the best testimony to the importance of this line of research is that dsge models have breached the walls of academia, and are today being increasingly used at central banks as key input in the policy process. a key building block of this class of models is the “ new keynesian phillips curve ”, which in its original incarnation relates current inflation to its expectation next period and