samchain/econo-pairs-v1 huggingface dataset:
Indeed, the revisions to estimates of potential growth have mostly occurred after the crisis, whereas it is most likely that the slowdown in productivity had already startedbefore the crisis but was masked by the credit-fuelled boom. For example, in 2007 the euro area’s output gap was estimated by international institutions such as the IMF, the OECD and the European Commission to be negative – somewhere between –0.2% and –0.6%. The most recent estimates put the output gap in the region of positive2.7% to 3.4%, a significant downward revision to views of potential. At the same time as potential growth has been declining, the share of global factors driving inflation seems also to have been increasing. In large part, the common global trend can be explained by the decline in price of energy and other commodity prices. But low global inflation goes beyond weakness in domestic demand and falling energy and commodity prices. In recent years there has been a growing understanding of the role of global demand factors on domestic inflation.6 For example, it has been observed that changes in the degree of slack in OECD economies are having a smaller impact on inflationary pressures than it has in the past.7 In part this changing 5/7  BIS central bankers' speeches  correlation is a result of the success of monetary policy in anchoring inflation expectations.

It is not to say that the banking sector response was all that we wanted because there were still some elements and gaps in the market response that we felt were inadequate. While overall credit grew well and continues to do so, some sectors, particularly SMEs, did not receive the credits we wanted them to get. The credit did not extend or reach out to the sectors hit particularly hard by Covid-19. Our response is to design policy measures to supplement the market response, for example, what we initially called a soft loan program. The program then started to have some obstacles because of the pricing of the loan structure. Therefore, we came up with another emergency degree on Financial Rehabilitation Measures, which in part established a loan facility for SMEs with a credit guarantee component from the government. The measures were to encourage the banks to lend to those sectors which had not received adequate credit by addressing the high credit risk that banks might experience from lending to SMEs. As a result of the package that we put together on the SME front, we managed to see loan growth in SME sectors. These measures are examples of the proactive response that policy authorities, both on the fiscal side at the Ministry of Finance and us on the monetary side at the Bank of Thailand, try to get the economy through this crisis, as well as it could be reasonably expected.
Norwegian interest rates are now somewhat higher than expected short-term interest rates in the long term. This reflects a relatively tight monetary stance and tight economic conditions. On the other hand, interest rates in the US and Germany are exceptionally low as a result of the downturn. Short-term rates have not been that low in the US for 40 years. The wide difference between the economic  2  BIS Review 65/2002  situation and short-term interest rates in Norway and abroad is one of the driving forces behind the appreciation of the krone. Forward rates ahead indicate that the market expects the interest rates differentials to diminish as the cyclical divergence narrows. The relationship between interest rates and exchange rates was not as strong during the period when equity prices rose sharply towards the end of the 1990s and to the first quarter of 2000. This was a period when the quest for equity gains was also important for exchange rate developments. Financial markets have since shifted their focus. Even if the krone is strong, expectations concerning the krone are not particularly strong. If kroner are bought forward for delivery a few years ahead, and the exchange rate is agreed today, it will be at an exchange rate that is on a par with the average exchange rate for the 1990s. The cyclical divergence that is reflected in the krone exchange rate is not entirely disassociated from our position as an oil economy.

In the central government budget for 2003, the allocations for the purchase of goods and services and for transfers show underlying growth of 4.6 per cent and estimated real growth of 0.5 per cent. The effect of the draft budget on demand is estimated to be mildly positive. The central government budget includes a proposal to increase the use of petroleum revenues by NOK 2 billion in real terms in 2003. The structural deficit in 2002 appears to be higher than was assumed this spring. The projections for the use of petroleum revenues up to 2010 have been revised downwards considerably since the Long-Term Programme, the National Budget for 2002 and the Revised National Budget for 2002 were presented. The krone has appreciated considerably since summer 2000. There may be several reasons for this. Relationships in the foreign exchange market are unstable. There are still several fundamental forces that influence the krone. One is purchasing power parity, another the phasing in of petroleum revenues and a third is cyclical developments in Norway and other countries. Moreover, the krone can be influenced by a shift in wage formation, and the krone can also be affected by external factors. A fundamental driving force is purchasing power parity. Prices in Norway relative to prices in other countries, measured in a common currency, have remained fairly stable over time. Purchasing power parity can be illustrated by movements in the relationship between the Norwegian krone and the German mark in the last 30 years of the mark's life as a currency.
is a parameter that expresses how much weight is given to stable output versus low and stable inflation. If is greater than 0, this is often referred to as flexible inflation targeting. 8  BIS Review 10/2007  Thirty to forty years ago, economic policy was widely regarded as an optimal control problem where the authorities could minimise society’s loss function directly and mechanically. Economic policy could in a sense be viewed as an engineering art. However, in 1977 Finn Kydland and Edward Prescott warned against this approach to economic policy conduct.4 In their work, for which they were later awarded the Nobel Prize, they showed that if the authorities in each period attempt to optimise on a discretionary basis, a suboptimal equilibrium may arise. The reason lies in economic agents’ expectations formation. Kydland and Prescott argued in favour of a rule-based policy, where policymakers commit to a certain pattern of behaviour. They also pointed out that it would generally be tempting to "reoptimise" at a later time and thereby ignore earlier promises. This temptation is often referred to as the "time inconsistency problem". For a rule-based policy to be successful, it must be credible so that economic agents can fairly safely assume that decision-makers will actually follow their announced response pattern. Norway’s experience of various fixed exchange rate regimes during the post-war period provides a good illustration of the difference between discretionary policy and commitment policy. In the period 1946-1971, the krone was pegged to the US dollar.

Let me attempt to illustrate the gains of committing to a response pattern rather than pursuing a purely discretionary policy. We have developed tools that allows us to find interest rate paths that minimise the loss function, given a model of the economy’s functioning and given economic shocks. Within the framework of a small macroeconomic model, we have estimated the magnitude of the shocks to which the Norwegian economy has been exposed over the past 10-15 years. Under the two assumptions about monetary policy, discretion and commitment, we have estimated how large the variance of output and inflation will be over time. We have assumed that the economy is exposed to the same shocks as in history. Let me emphasise that this exercise is only meant as an illustration based on a stylised economic model. 10  BIS Review 10/2007  The chart shows the variance of inflation on the vertical axis and variance of the output gap on the horizontal axis. By minimising the loss function that I presented above under discretion and commitment respectively, we obtain different combinations of the variance of inflation and the variance of the output gap. By varying the weight on the output gap, lambda, in the loss function, we obtain a line for each strategy. The lines represent the minimum loss that can be achieved under commitment and under discretion.
As the cycle, or perhaps I should say if the cycle, becomes synchronized all over the world, the need for independent monetary policies may fade away. Gradually, the number of currencies in the world will decrease through time. This is not economic fiction: a tendency in this direction is already present among smaller countries in Latin America with large trade and investment relationships with the United States. However, a world tendency to a significant decrease in the number of currencies is probably a very long run one, where Keynes’ dictum on the long run comes to mind. In any case, I am convinced that, 5 as Rogoff argues in a recent paper , it may not be desirable to pursue currency consolidation all the way. Meanwhile, in the short and medium run, the increase in productivity provides more room for monetary policy to maneuver. Productivity growth alleviate inflationary pressures providing more room for monetary policy to exert its short run influence on the real economy. 5. Flexibility  The key word for an emerging economy in a changing world is flexibility: in exchange rates and interest rates, to accommodate shocks without concentrating their effects in one particular market; in factor markets, both labor and capital, to minimize the cost of transition from one state of the economy to another. The task before us, in an emerging economy like Chile, is to increase flexibility in all markets.

And shorter cycles make for a more effective monetary policy. 1  Krugman, P. “Crisis: the price of globalization?” Paper presented at Jackson Hole, Wyoming, 2000. 2  World Economic Outlook, May 2001, Chapter III: “Three Current Policy Issues: Impact of the Global Technology Correction on the Real Economy”, page. 57-66. 3  Brookings Institution (2001): “The Economic Payoff from the Internet”. www.brook.edu/es/research/areas/it/ipibisummary.htm. Blinder, Alan (2000): “The Internet and the New Economy”, Brookings Institution Policy Brief N°60, June. Altig D. y Peter Rupert (1999): “Growth and the Internet: Surfing to Prosperity?”, Federal Reserve Bank of Cleveland Economic Commentary, September. 4  For instance, Robert Gordon (Does the “New Economy” Measure Up to the Great Inventions of the Past? Journal of Economic Perspectives, Fall 2000) mentioned “the new economy has meant little to the 88 percent of the economy outside of durable manufacturing; in part of the economy, trend growth in multifactor productivity has actually decelerated, despite a massive investment boom in computers and related equipment”. Page 72. BIS Review 53/2001  1  Optimal inventory management in an increasingly open international economy will not only imply shorter, but also, most probably, more synchronic cycles. A by-product of this development is an expansion of the geographical limits of optimum currency areas à la Mundell. 3. Terms of trade shocks and emerging economies  The synchronization of the cycle increases volatility in commodity markets, an important source of international transmission of the cycle to a good number of emerging economies.
By “choice architecture,” I mean the broad array of options that promote decisions aligned with the values and goals of your respective firms.5 How choices are presented can have a dramatic impact on outcomes. Taking account of ordinary, human biases —including the ones I just mentioned—and organizational culture can help you present options in a manner that yields better results. In the world of risk controls, individuals face choices every day—choices whether to walk right up to the line of appropriate behavior and risk crossing it; choices to get more or less compensation in exchange for riskier behavior; and choices to raise their hands (or not) when they suspect that something has gone awry. In my view, effective controls require an appropriate balance of narrowly focused, prescriptive rules, and broader principles and standards. The precise balance will vary, depending on the task and the firm. But regardless of the setting, a thoughtful set of risk controls can improve the choices that employees make. One other word of advice on choices. People need time—time to stop, breathe, and ask for help if they need it. Making decisions sooner than necessary can lead to mistakes. As human beings, we do not always see consequences in the first instance. We need time to process. Of course, time can sometimes seem like a luxury. Time is, after all, money—or so we have been told. But the consequences of making the wrong choice because you are in a hurry can be far more expensive.

Lawyers, for instance, can be disbarred, and complaints against them can become matters of public record. That is added incentive to maintain the skills, character, and other qualifications required to become (and remain) a member of the bar. And, critically, professions do not stop improving. Lawyers continue—I hope—to seek a more just society. Doctors, a healthier one. I do not mean to call for the equivalent of the legal bar for bankers—although it might not be a bad idea. But there are elements of professions that could be useful. For example, forums like this one facilitate information sharing and promote a sense of community. A code of professional conduct is another example. Again, I refer you to the work of the Banking Standards Board, 5/7  BIS central bankers' speeches  which has developed a “Statement of Principles for Strengthening Professionalism.” Like Bill Dudley, I have argued that banking would benefit from a misconduct database. 15 Records of employee misconduct would be available to future employers to combat the so-called “rolling bad apple” phenomenon. Hopefully this would encourage more careful choices by bankers in the same way that the risk of disbarment prompts lawyers to think about the long-term consequences of their decisions. None of these ideas is a magic bullet. But they may be helpful as you consider how the first line of defense and the financial services industry develop as a profession. Conclusion: professional courage Let me end with one final thought on professionalism.
At the same time, we can conclude the opposite with regard to the inflation forecasts (OH 2 inflation forecasts 1998-2002), which we have been forced to revise upwards again and again. If we are right that a recovery is now beginning both in Sweden and abroad, we can conclude that the economic downturn was one of the mildest of the post-war period, partly as a result of resolute stabilisation policy. However, the slowdown in Sweden and the rest of the world during 2001 was unexpectedly severe in relation to the forecasts made in 2000. The fact that forecasters miss turning points in the economic cycle is not unique to this particular downturn, but quite a common phenomenon. I will return to the current situation, but first a look back in time. Historical patterns are repeated Is it possible to learn lessons from history? Both yes and no. If one studies economic slowdowns over the past three decades, one can see that they differ considerably both with regard to causes, sequence of events and recovery. There is no simple, cyclical pattern that is automatically repeated. At the same time, it is clear that what we have experienced now has elements in common with 1 previous cycles. In some industrial nations, including the USA, the economic downturns during the 1990s have become milder compared with the downturns during the 1970s and early 1980s. Deep recessions have been unusual and arisen in combination with major structural problems, such as bank crises.

What really counts is the direction for monetary policy on the basis of the information available at the time the decision is taken, not what should have been done if it had been possible to predict the future with perfect accuracy. When we experience major disturbances or changes in the economy, we cannot merely concentrate on the effects on prices. Let me illustrate this with reference to oil prices. If we assume that oil prices rise. Inflation rises, which means that real wages fall, partly as a result of petrol and heating oil becoming more expensive, which means that consumers have less money over to spend on other goods. This leads to a decline in demand and thereby in prices on other goods. Higher oil prices can thus lead to both rising prices and lower demand, which in the long term will once again subdue inflation. It is difficult to predict oil prices as they do not always reflect the demand and supply situation, but are also connected to politics. The current situation can illustrate this difficulty. Are oil prices rising because the increase in global demand and growth is higher than was assumed, or is the political uncertainty in the Middle East the most important factor? What is the resource situation within the economy? A price rise that occurs when resource utilisation is on its way down can lead to a rapid and profound decline.
Annual Financial Lunch of the French Chamber of Great Britain London, 23 November 2017  Speech by François Villeroy de Galhau, Governor of the Banque de France  “Europe, France and the United Kingdom: facing our common economic challenges”  Press contact: Clémence Choutet (+ 33 1 42 97 74 51; clemence.choutet@banque-france.fr). Page 1 sur 5  Ladies and Gentlemen, It is a pleasure to be in London today and I wish to thank you for inviting me to speak at your Annual Financial Lunch. The destiny of France and the United Kingdom has indeed been linked for a very long time; the existence of the French Chamber of Commerce in Great Britain, which was established 143 years ago, is a good illustration of these firm and lasting ties. In this regard, I would like to express our full solidarity for the series of terrorist attacks that hit London recently. King Georges VI declared in 1940, and his words still apply to this day, that: “It is not the walls that make the city, but the people who live within them. The walls of London may be battered, but the spirit of the Londoner stands resolute and undismayed.” I believe that the spirit of resilience that is so characteristic of Londoners is what we need the most in times of crisis. We are and will always remain close friends and partners, even if we will no longer – unfortunately – be in the same European Club when Brexit is completed.

The second risk is related to the protectionist tendencies in the United States, after the election of the president. We, Europeans, shoulder-to-shoulder with Canada, Japan and others elsewhere, must resolutely defend international economic relations based on  Page 4 sur 5  commonly respected rules and multilateral institutions: their deterioration would dampen world trade and economic activity. III. Our future relationship and Brexit. There is one obvious challenge nevertheless that we will have to face together: our future relationship and Brexit. A year and a half ago, the British people chose to leave the EU and, even if we regret it, we respect this democratic decision. Now we have to work towards reducing uncertainty and the negative impact it may have for the United Kingdom and, albeit to a lesser extent, for the European Union. The Banque de France is not directly involved in the Brexit negotiations; this falls within the remit of governments and the European Commission, and more specifically Michel Barnier, who is conducting this mission with impressive commitment. I sincerely wish that we can achieve a constructive agreement. Let me say it loud and clear: no one is seeking to punish the UK in any way and we truly hope to keep the UK as a close partner.
And the issuance of asset-backed securities in the UK, which involve parcelling up and selling different claims on pools of assets such as consumer loans and mortgages, has risen to some $ billion from $ billion in 1995. The UK now accounts for around a third of the issuance volume in European ABS markets. On the whole, such developments are positive for financial stability. Coupled with greater macroeconomic stability (Chart 3), they have made the financial system more robust by allowing market participants greater scope to distribute and diversify risk and to manage it effectively. Experience of previous rounds of financial innovation also suggests grounds for optimism. Swaps and other over-the-counter interest rate derivatives, for example, are now well understood and widely recognised as increasing economic flexibility and the productivity of capital. More recently global financial systems and the newer asset markets appear also to have withstood several recent shocks, such as September 11, the Dotcom bubble, the GM related wobbles in May 2005, Refco, and the Iraq war. The fact that some investors, such as hedge funds, are willing to take on greater risk does not necessarily give rise to system-wide concerns. Systemic risk in modern financial systems But there are limits to the amount of risk that can be hedged away. The financial system cannot reduce the amount of risk in the economy, but only repackage and transfer it.

The savings glut has in turn had a contribution into the increase in prices on the stock exchanges in the US, and subsequently to the increase of property prices, which has in turn lowered the level of savings of American households. The International Monetary Fund argues against the hypotheses of Bretton Woods 2 and the global savings glut by stating that the source of the current account surplus is an exceedingly low level of investments in Asia, except for China. Therefore, one should speak of a global investment draught rather than anything else, 30 as over the five years following the Asian crisis in 1997-1998, the investment level was by 7 percentage points lower than in the five-year period preceding that crisis. Considering the above, an appropriate recommendation for those countries is not limiting their savings rate, but rather improving their investment climate. There are numerous theories that attempt to explain the occurrence of global imbalances. According to some of them, the major reason behind global imbalances is the low level of savings in the US household and public sectors, 31 i.e. the fact that Americans spend more than they earn, and that the budget deficit, from a substantial surplus in the year 2000, turned into a level estimated at 4.7% of the GDP in 2004.