intellectual bankruptcy of economic research. nearly two weeks ago, chancellor merkel also made reference to this. at the 5th lindau meeting on economic sciences ( attended by nobel laureates in this field ), she noted that “ we are coming from years in which one (... ) did not always have the impression that economics already knew everything about the future. ” many are now indeed wondering quite fundamentally what use economics is to society. the question of the usefulness of economics to society is probably also a reason why, at the aforementioned gathering of nobel laureates, the closing panel discussion was entitled “ how useful is economics – how is economics useful? ” 3. the lessons of the crisis ladies and gentlemen, christoph schmidt, chair of the german council of economic experts, was quoted in yesterday ’ s frankfurter allgemeine zeitung newspaper as saying bis central bankers ’ speeches that, “ despite the uncertainty surrounding our statements, our work is still important because we can contribute to imposing a limited amount of order on a complex and uncertain world without feigning false certainties. ” the job of economics is to explain economic interrelationships and to use these explanations as a basis for making economic policy designed to increase public welfare. economics is thus, if we accept that view, a discipline which is certainly of relevance to society. however, we must admit that economics has not always been up to the task. the financial crisis showed that there were many things about financial markets which we did not know, and that much of what we thought we knew was not reality - based. this is not least because, some of the time, economists act much like the one in the story i told you at the beginning. often, they were looking where the light was, not necessarily where the knowledge was. in that vein, precisely what the standard macroeconomic models were lacking was the financial sector, which made these models incapable of predicting the financial crisis. the framework of these models therefore needs to be broadened. in the meantime, many highranking economists are working on integrating the financial sector into standard macroeconomic models : mark gertler, lawrence christiano, massimo rostagno, roberto motto and markus brunnermeier, to name but a few. although progress is being made, research has not yet reached the finishing line. but why was the financial sector missing from the models? well, it is undoubtedly very difficult to model it mathematically. this seems to have been a hurdle initially

nation whose economy is expected to contract in 2023. our experts see this as the outcome of two developments in particular : the at times very high energy prices caused by the russian war against ukraine and a currently weak global economy. 1 / 3 bis - central bankers'speeches the bout of weakness in the german economy is not, then, primarily structural, as is being suggested by the debate on potential deindustrialisation. this, in turn, is consistent with most forecasts for germany for 2024, which are already predicting a recovery in economic activity. therefore, i cannot agree with the " sick man " diagnosis. 2 challenges to and opportunities for the german economy however, germany and its firms face major challenges – of that, there is no doubt. we discussed this in an article in the september issue of the bundesbank's monthly report. [ 1 ] i would like to briefly address two of the key challenges. for one thing, there is the decarbonisation of the economy. climate change is advancing rapidly and affecting all of humanity. for another, the high electricity and gas prices are continuing to show us in no uncertain terms how heavily we still rely on fossil fuels. transitioning away from oil, gas and coal and expanding renewable energy will therefore not only be good for the climate, but will also make us more independent and may potentially lead to lower electricity prices again in germany over the long term. however, another thing is clear as well : the era of at times very low energy costs is over for now. that's something that all consumers of electricity – be they big or small – will have to get used to. some parts of industry, claiming that they are at an acute competitive disadvantage to their foreign rivals, are calling for a rapid artificial reduction in the price of electricity for some firms. in my view, however, this will only delay the inevitable structural change. transitioning towards net zero means comprehensively restructuring our economy : prominent examples include energy generation, networks, new storage capabilities, heating technology and transport. all of these will require extensive investment : in new equipment, but also in research and development, in order to use energy efficiently. policymakers can play a supportive role in this regard : reliable and consistent climate policymaking will create planning certainty on the path to carbon neutrality by 2045. at the same time, government approval processes and judicial review procedures need to be sped up. at the european level, germany should campaign for further progress to be made