hamilton, j. ( 2017 ), “ why you should never use the hodrick - prescott filter ”, department of economics, uc san diego, mimeo ; and mohr, m. ( 2005 ), “ a trend - cycle ( - season ) filter ”, ecb working paper no 499. 11 see blanchard, o., g. lorenzoni and j. - p. l ’ huillier ( 2017 ), “ short - run effects of lower productivity growth : a twist on the secular stagnation hypothesis ”, nber working paper no 23160. 12 see e. g. yagan, d. ( 2017, op. cit ). 13 see cœure, b. ( 2017 ), “ scars or scratches? hysteresis in the euro area ”, speech at the international center for monetary and banking studies, geneva, 19 may. 14 shakespeare, w. ( 1597 ), romeo and juliet, act 2, scene 2. 15 see jarocinski, m. and m. lenza ( 2018, op. cit ). 16 see fernald et al. ( 2017, op. cit ). 17 some, however, claim that the productivity boom of the 1990s may have merely reflected a strong economic expansion ; see in particular gordon, r. ( 2000 ), “ does the “ new economy ” measure up to the great inventions of the past? ”, nber working paper no 7833. 18 see comin, d. and b. hobijn ( 2010 ), “ an exploration of technology diffusion ”, american economic review, vol 100 ( 5 ), pp. 2031 – 59. 19 see mckinsey global institute ( 2017 ), “ a future that works : automation, employment, and productivity ”, january. 20 see, for example, pellens, m., b. peters, m. hud, c. rammer and g. licht ( 2018 ), “ public investment in r & d in reaction to economic crises – alongitudinal study for oecd countries ”, zew discussion papers no 18 – 005, centre for european economic research. 21 see mckinsey global institute ( 2016 ), “ digital europe : pushing the frontier, capturing the benefits ”, june ; and mckinsey global institute ( 2015 ), “ digital america : a tale of the haves and have - mores ”, december. 22

technology, causing productivity growth to stabilise at lower levels and weak potential growth to become self - fulfilling. this is rather about the timing of investment : the coincidence of a protracted period of weak demand and major transformative technological breakthroughs may have further delayed closing what some call the “ innovation gap ” – the distance to the technological frontier. 20 in the euro area, for example, the double dip of the great financial crisis and the sovereign debt crisis may have delayed investment in new technologies. indeed, research finds that europe operates at only 12 % of its “ digital potential ”, and the united states at only 18 %. 21 for example, the share of retail e - commerce in europe was less than 9 % last year, compared to 15 % in the united states. but this coincidence should in principle be temporary. another scratch so to speak, not a scar. as the cycle matures and we reach the point where capacity is starting to constrain firms in meeting rising demand, they could well become readier to bear the fixed costs associated with technology upgrades. policy implications all this leaves me with two tentative conclusions. one is that what we are currently seeing may be more likely to reflect the normal interactions between demand and supply caused by the cycle, than hysteresis effects and their reverse. the second conclusion is that the outlook for productivity growth may be less concerning than current figures suggest. this has a number of implications for economic policies. for structural policy, it shows that policies that accelerate the diffusion of productivity growth from the technological frontier are of critical importance. as i have discussed elsewhere, frontier firms in the euro area are generally as productive as their global peers, especially in manufacturing. 22 it is non - frontier firms that are weighing on aggregate productivity because the diffusion engine has slowed. for this reason, the aim of structural reforms in europe should above all be to tackle this inefficiency by allowing labour and capital to be allocated in a more efficient way across the region, including by completing banking union, keeping up with the ambition of capital market 5 / 7 bis central bankers'speeches union and launching a more ambitious single market agenda. 23 and this will only become more important going forward, as the drag from an ageing society can be expected to lower the labour contribution to potential growth, meaning future gains in living standards will have to come more from productivity. for monetary policy, i see two implications. the first is that our current monetary policy stance is appropriate. it has been