##ary processes. moreover, the boom and bust of the japanese housing sector in the late eighties and early nineties, and the recent sub - prime mortgage crisis in u. s. suggest that the macroeconomic implications of the housing sector may have been underestimated. despite the importance of these issues, they are not sufficiently reflected in more sophisticated models. ladies and gentlemen, uncertainty comes in various forms and it is something that policy - makers must constantly contend with. economists have developed a range of formal methods for recognizing and coping with uncertainty, all of which offer important insights into how policy - makers should manage the problem. in addition to the theme of modeling uncertainty, this conference will see the presentation of interesting related papers. for instance, these papers will address how we can identify shocks to fiscal variables, and how the bayesian framework can be applied to detect regime changes or to make macroeconomic models more consistent with the data. i hope that this conference will serve as a forum for the better understanding of the very nature of the uncertainty that surrounds our economic environment, and for the discussion of how we can manage a range of uncertainties. i believe that our in - depth discussions will lead to a better way of dealing with uncertainty in monetary policy - making. drawing my remarks to a close, i should like to express my deepest gratitude to all participants for sparing valuable time to be here with us. thank you.

and this seems to be due to overly rigid labour, goods and services and financial markets. structural reforms that would allow the economy to be made more flexible are the primary tools for achieving a leap in productivity. in the united states this was made possible in the mid - 1990s. and, consequently? one should never underestimate the importance of investment in research and development, which are today insufficient both in italy and in the euro area as a whole. you have mentioned structural reforms, which are currently at the heart of the italian political debate on developments in the finance laws. let us begin with the deficit - to – gdp ratio, which is well above the 3 % limit. is the situation in italy a cause for concern for you? our message to italy, as to all euro area countries, is the following : the benefits that higher than expected economic growth is bringing, in particular in terms of higher tax revenues, should be allocated entirely to reducing the public deficit and preventing the growth of debt. that is a kind of recommendation. yes. the position of the governing council is very well known. we are recommending rigorous compliance with the stability and growth pact. and as a general rule we would suggest first that public spending be reduced, and only after as much as possible has been done in this area, that taxes be increased if necessary in order to comply with the stability and growth pact. you know tommaso padoa - schioppa well after having worked with him for so many years here in frankfurt. will he do this to improve italy ’ s accounts? tommaso padoa - schioppa is one of the most experienced persons, not only within italy and europe, but also in the world. he has personal influence, and personal prestige in all fields of money and finance, which i regard as being very important. of course, it is clear that the challenges and risks that he faces are enormous. ” being a minister is not like being a banker, the tasks and responsibilities are quite different. “ tommaso has been a marvellous banker, but he has also held a large number of other responsibilities. these are different tasks, but they both require clear judgement, decision - making ability, strength of character and determination. let me add that i do not forget myself that central bankers, by definition, have a multipartisan responsibility. why? price stability is a common benefit for all citizens, regardless of their political sensitivities and individual preferences. according to