luis de guindos : loukas karabarbounis ’ s contribution to research on the interaction between labour and capital market imperfections and macroeconomic outcomes speech ( via videoconference ) by mr luis de guindos, vice - president of the european central bank, at the award ceremony of the bernacer prize to professor loukas karabarbounis, frankfurt am main, 21 october 2020. * * * it is a pleasure for me to celebrate with you the award of the 2019 bernacer prize to loukas karabarbounis, professor of economics at the university of minnesota. 1 as you know, the bernacer prize has been awarded every year since 2001 to an outstanding young european economist working in the fields of macroeconomics and finance. the rigour, innovative approaches and policy relevance of loukas ’ s work make him a deserved recipient of this prize and, more generally, of the recognition from both academics and policymakers. loukas has been awarded the bernacer prize for his “ influential research on the interaction between labour and capital market imperfections and macroeconomic outcomes ”. loukas has made important contributions in a number of areas but today i would like to focus on his work to improve our understanding of key macroeconomic trends such as the decline in the share of national income that goes to remunerating workers – known as the declining labour share – the low level of capital investment and the rise of corporate savings. the declining labour share is now a widely accepted fact. indeed, recently a large body of literature has established that the decline began in the united states in around 1980. in one of his papers2, loukas broadens this perspective and shows that the decline in the labour share is a global phenomenon present in most countries and industries around the world, thus helping to strengthen the consensus around the facts. as in other studies, he also demonstrates that the share of national income that accrues to capital – or to the so - called rental cost of capital – does not rise sufficiently to offset the decline in payments to labour. as a result, there is a significant amount of residual income – for which loukas and co - authors coined the term “ factorless income ” – which has been growing as a share of income in the united states since the 1980s, while the labour share has been declining and the share of income that remunerates capital has remained subdued. economists and policymakers agree on the need to identify the

year of restrictions, as well as social and economic difficulties. for 2020, the imf forecasted a contraction of real gdp in europe of 7 percent, the biggest contraction after world war ii. thanks to the extraordinary policy response, even more dramatic consequences have been avoided. i understand that the full extent of the pandemic ’ s impact on companies in 2020 is yet to be revealed as time passes and more data becomes available. i agree that long - lasting changes in the structure of the economy will occur, even though they are hard to predict at this moment. moving forward, a better policy calibration is needed in order to weather these structural changes and banks should put in place arrangements for restructuring the debt of those firms that can be saved, while facilitating the orderly exit of those firms that are unlikely to succeed in the postpandemic economy. the uncertainties remain extremely high and further delays in the economic recovery will put more pressure on the public resources and complicate the trade - offs in their reallocation. however, i would like to end on a more optimistic note and say that we do hope for a swift 1 / 2 bis central bankers'speeches recovery as we continue to do our part in curbing the effects of the pandemic. with these in mind, i wish ms laura valderrama success with her presentation on the results of the analysis of corporate vulnerabilities and a very fruitful discussion to all the panelists and guests. mr kammer you have the floor. 2 / 2 bis central bankers'speeches