and r. h. litzenberger, ( 1973 ) : “ a state - preference model of optimal financial leverage ”, journal of finance. 28 : 911 – 922. conclusions i should like to conclude by pointing out that the covid - 19 pandemic has prompted an unprecedented economic contraction in spain and in other economies. non - financial corporations have been seriously affected, although the forceful measures adopted by the national and supranational economic authorities have prevented the materialisation of a wave of defaults stemming from short - term liquidity problems. however, some firms have seen their solvency impaired as a result of a decline in their revenues and an increase in their debt. the current phase of the crisis, marked by an incomplete and uneven economic recovery, warrants continuing public support to firms. nonetheless, these policies should be adjusted so as to focus more on firms in sectors that continue to be severely affected by the crisis, and through means other than the accumulation of greater debt. debt restructuring mechanisms need to be more efficient, so as to promptly resolve the insolvency problems some firms are experiencing. other structural policies could also contribute to shoring up the composition of firms ’ debt in order to assign a greater weight to capital. these policies might include the elimination of the preferential tax treatment of debt as opposed to equity and headway in developing equity markets in europe. finally, as mentioned on various occasions, all these measures must form part of an ambitious reform agenda aimed at tackling our economy ’ s structural problems. these include most notably high unemployment, labour market duality and the low productivity of our firms. and, in parallel, we must design a credible strategy for reducing, in a gradual but sustained fashion, our fiscal imbalances. such a strategy may be implemented once the pandemic is behind us and the economic recovery is firmly entrenched. it would entail significant benefits, by increasing the economy ’ s reform - led potential growth and by enhancing the credibility surrounding the sustainability of public finances in the medium term. that, in turn, would increase the existing fiscal space available and would boost the expansionary effects of the current fiscal measures. in short, so we may have the fiscal leeway needed to be able to increase support measures to the economy should pandemic - related developments so require, we must resolutely implement the reform agenda, plan the fiscal consolidation process and reform support instruments to make them more flexible and targeted. thank you very

economic weakness should lead to a squeeze on profit margins, the indicators available up to the end of 2022 do not yet show clear signs of any such squeeze. there is considerable heterogeneity across sectors and the cyclical situation of the economy and demand conditions will play a key role in the degree to which higher wage costs are passed through to final prices, as well as in the behaviour of profit margins going forward. ferrucci, jimenez - rodriguez and onorante ( 2012,, " food price pass - through in the euro area : non - linearities and the role of the common agricultural policy " international journal of central banking ) find asymmetries between positive and negative shocks in the food inputs, borrallo, cuadro and perez ( 2023, forthcoming ) confirm these results for the euro area by extending the sample to the present time. in the case of oil, kilian and vigfusson ( 2011, quantitative economics, " are the responses of the u. s. economy asymmetric in energy price increases and decreases? " ) show that there are no significant asymmetries in the united states. however, garzon and hierro ( 2021, economic modelling " asymmetries in the transmission of oil price shocks to inflation in the eurozone " ) find that asymmetries do exist in the euro area. according to the ecb's march forecast, nominal wage growth, as measured by compensation per employee, will increase from 4. 6 % in 2022 to 5, 3 % in 2023, before declining to 4, 4 % in 2024 and 3, 6 % in 2025. this has happened in a context of a sharp increase in public employment, whose growth has accounted for about half of total employment growth since the end of 2019. the ecb experimental tracker of negotiated wages shows a clear upward shift in wage increases agreed for 2022 and 2023. contract negotiations during 2022 delivered wage increases around 4, 4 % and 4, 8 % for 2022 and 2023 respectively, with higher increases the more recent the agreement is. additionally, a second wage growth tracker based on wages offered in new jobs also showed strong increases during 2022 suggesting strong wage momentum, though last readings show tentative signs of stabilitation. see p. lane ( 2023 ) : underlying inflation, lecture at trinity college dublin, 6 march 2023. defined as those items in the core inflation basket for