announced that price stability according to this definition shall be maintained over the medium term. thereby, it provides the public with clear guidance for inflation expectations. in addition, the ecb's transparent framework facilitates the process of accountability of the ecb by providing a yardstick against which its performance can be assessed. the statement that " price stability is to be maintained over the medium term " acknowledges the existence of short - term volatility in prices, resulting from non - monetary shocks to the price level such as the effects of indirect tax changes or variations in international commodity prices. there are good economic reasons why monetary policy should be oriented towards the medium term. monetary policy affects prices with " long and variable lags ", so that a policy of fine - tuning the economy is, in practice, neither a viable nor a desirable option. it is evident that the ecb cannot be held responsible for short - term shocks to the price level, since it has little control over them. rather, assessing the outcome of the monetary policy of the ecb over the medium term ensures a meaningful and genuine accountability. having a well - defined goal is vital. in addition, the ecb, like any other central bank, also requires an analytical framework which facilitates the achievement of this goal. the ecb's strategy recognises that, in an environment of change and uncertainty, no single model or view of the world is likely to be fully adequate to capture the ongoing economic processes and the implications for price stability. the need to adopt a diversified approach to analysing and assessing information in an uncertain world was a main reasoning behind the adoption of the ecb's two - pillar strategy. the distinct, yet mutually - reinforcing perspectives of a complex and changing environment provided by the two pillars are the best tools with which the ecb can distil and master the information relevant for monetary policy - making. under the first pillar, the ecb assigns a prominent role to money. a broad array of aggregates, ranging from m3 to its components and counterparts, notably credit, are analysed in order to assess threats to price stability. assigning a prominent role to money guarantees that the fundamentally monetary origins of inflation will not be neglected in the analysis driving monetary policy decisions. the prominent role of money is signalled by the announcement of a reference value of 4½ % for the annual growth of the broad aggregate m3. this reference value defines the rate of growth of m3 which is consistent with price stability over

, and participation in international organizations. the data used refer to 2006. there is also evidence in the literature that trade openness positively contributes to life satisfaction ; see bjornskov, dreher and fischer ( 2007 ). have enough “ punch ” to turn things in the direction that european citizens want. this creates a “ demand ” for more “ europe ” in the globalisation process, to which europe does not seem to be responding in the right way. i will come back to this later. in my opinion, policy - makers ( including central banks ) have to take these perceptions seriously. in economics, perceptions shape reality. it ’ s therefore important to understand how globalisation, and the concerns that it generates in households and companies, affects the latter ’ s behaviour. let me give you an example provided by robert shiller. 7 suppose that a young person is uncertain whether to pursue a career in which she has real talent but which is fraught with risks, say, as a molecular biologist, or something less risky but with lower value added. a highly uncertain economic environment, with rapid technological progress and the looming prospect of offshoring naturally increases risks for individuals. if such a risk is perceived as falling entirely on the shoulders of individuals, a bad equilibrium may be reached, one where high value - added jobs that require long - term investment, such as molecular biologist, are shunned, while jobs less threatened by off - shoring ( say, hairdresser or restaurant owner ) are in greater demand. 8 the hypothesis is that economic uncertainty and a high degree of competition may have an adverse effect on jobs and tasks that require long - term investment. this may lead to under - investment in society. i raised this issue with ned phelps a few days ago, as we met at a conference. he looked at me a bit puzzled and said : “ it sounds like a very european way of thinking! ”. i guess i should turn the issue back to you. mobility is another issue that raises concerns in our societies. in the global economy, being mobile definitely provides a competitive edge. in the european union, only a tiny fraction of its workers work in another eu country and there are many obstacles to such mobility, not last the portability of the pension regime. another issue that is present in the public mind is the share of wages and profits in total income, which has been shifting in favour of profits in the past decade on a global basis, though it is not beyond dispute