samchain/econo-pairs-v1 huggingface dataset:
This double-dip recession has pushed us off the growth path we were on just five years back and halted the process of real convergence. GDP per capita in Spain currently stands at 90% of the euro area average, after having exceeded 95% in 2007. Or, if you prefer, production per capita, after rising notably in the pre-crisis years, today scarcely exceeds the levels of a decade ago. Fortunately, the latest data support expectations of a gradual recovery of the Spanish economy, which might have already begun in the third quarter of this year according to data published by the Banco de España last week. However, the task ahead of returning to sustainable growth to place us back on track to regaining forgone prosperity remains formidable. This includes progressing further with the major reforms already undertaken in various areas, including the financial sector. In this latter field, nevertheless, the significant measures to be adopted in our country are closely linked to the regulatory reforms designed at European and international level. In fact, the crisis has underlined noticeable deficiencies in the regulatory framework of banking. I imagine that during today's seminar you will have analysed them in detail.

Indeed markets are becoming ever more important as individuals bear increasing responsibility for financing their retirements and insuring risks. It is vital markets work well - and are seen to do so. Only real markets can deliver. Real markets are resilient. They don’t collapse when the going gets tough. Real markets are fair. Participants compete on merit rather than collude online. Real markets aren’t ends in themselves but means to much greater ends. Only markets that transparently serve the real economy can retain the trust of society to operate; in other words, only real markets have social licence. The crisis and its aftermath laid bare that many of our markets didn’t live up to these standards. At times, some of the most important Fixed Income, Currencies and Commodities (FICC) markets proved fragile, unfair, ineffective and unaccountable. The twin crises of the solvency and legitimacy of finance undermined trust in market mechanisms and the effectiveness of the financial system. 1  Old and New London by Walter Thornbury ('Guildhall', Old and New London: Volume 1 (1878), pp. 383-396. BIS central bankers’ speeches  1  It is hardly surprising that only a third of people believe markets work in the interests of society.2 The more people see, the less they like. People trust markets less with age. And yet, most people think markets will become ever more important. And they’re right. As I wrote this week to G20 Leaders, the structure of financial system has changed significantly since the crisis.
This gives us an expression for the firm-level markup in terms of observable 𝛼𝑖𝑡𝑉 and the unobserved (but estimable) 𝜃𝑖𝑡𝑉 . The procedure below is all about consistently estimating this output elasticity. Estimation  We generally follow De Loecker and Eeckhout (2017, 2018) and Díez et al (2018) in our empirical application of the theory above. The production function they take to the data is given by 𝑦𝑖𝑡 = 𝑓(𝑣𝑖𝑡 , 𝑘𝑖𝑡 ; 𝜷𝑗 ) + 𝜔𝑖𝑡 + 𝜖𝑖𝑡  for all 𝑖 ∈ 𝑗 (𝐴4)  40  All speeches are available online at www.bankofengland.co.uk/speeches  40  where 𝑖 indexes a firm and 𝑗 denotes a 2-digit SIC07 industry, lower cases denote logs, 𝑦𝑖𝑡 denotes deflated net sales, 𝑣𝑖𝑡 denotes deflated cost of goods sold (COGS) (which are taken to be a measure of variable inputs), 𝑘𝑖𝑡 denotes deflated net plant, property & equipment (PPE), 𝜔𝑖𝑡 denotes unobserved (to the econometrician) technology, and 𝜖𝑖𝑡 denotes the measurement error of net sales. Note that the production function parameters 𝜷𝑗 are assumed to be industry-specific and time-invariant. We consider two specifications for 𝑓: Cobb-Douglas and translog. Under the former, the output elasticity with respect to COGS is exactly equal to 𝛽𝑗𝑣 . Under the latter, the output elasticity with respect to COGS is equal to 𝛽𝑗𝑣 + 2𝛽𝑗𝑣𝑣 𝑣𝑖𝑡 + 𝛽𝑗𝑣𝑘 𝑘𝑖𝑡 . A key challenge in estimating (A4) is the endogeneity of optimal input choices with respect to technology 𝜔𝑖𝑡 .

In China, for example, the service sector has grown to more than half of GDP in 2015, much of it driven by a surge in e-commerce and the expansion in logistical services required to support it. Moreover, as the cost of digital technology declines, a wider range of services are becoming more tradable including design, marketing, business processes, and education. Thus not only has the service sector 3  become more important within a country, the share of international trade in services has also increased markedly. The third, and perhaps most unsettling transitional force, is the ultra-accommodative monetary policy stance adopted by major advanced economies. What started out as extraordinary responses to a precipitous crisis, unconventional monetary policy measures have not only been maintained, but in many cases have been applied more intensively with ever greater degree of experimentation and radicalism. It is striking that after all this time, the crisis mentality among policy circles has yet to fully abate. The agglomeration of these transitional forces has had profound impacts on economies the world over. Together, the slowdown in world trade and the shift to services have underpinned important changes in inflation and growth dynamics. In terms of inflation, globalization has for many years increased the importance of foreign factors in price dynamics. Persistently low and more synchronized inflation is partly attributable to the effects of rising competitive pressures in world markets as well as common forces such as falling energy prices. As global trade adjusts, the influence of external factors has regained prominence.
This fall started earlier than in most other countries (see Figure 1). To counteract this development, the Riksbank started to cut the repo rate at the end of 2011. One circumstance that has a certain significance for my discussion going forward is that the Riksbank was already concerned about the rise in household debt and housing prices by this point. With the aim of contributing, to some extent, to dampening the build-up of debt and price increases, the repo rate was set slightly higher than otherwise would have been the case. 8 This is usually described as monetary policy ‘leaning against the wind’, where the wind represents some kind of financial imbalance that is deemed to be building up. However, what is important to understand is that, at this time, monetary policy was nevertheless largely governed by traditional monetary policy motives, that is, the expected development of economic activity and inflation over the coming years (see Figure 2). Risks linked to developments in household debt and housing prices were included in the assessment but did not play a leading role. I discussed this in detail in a speech a few years ago and, consequently, I shall not say much about it now. 9 But let me just emphasise that neither did other economic analysts consider that the monetary policy conducted was mainly a matter of the Riksbank  7 The CPIF is the CPI with a fixed interest rate.

Jaime Caruana: Contemporary issues in credit risk Keynote address by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, to the Credit Risk Summit USA 2003, sponsored by Risk Magazine, New York, 27 October 2003. *  *  *  Introduction I would like to thank Risk Magazine for inviting me to participate in this summit on contemporary issues in credit risk. Looking at the agenda, it is clear that, while credit may constitute the oldest risk in banking, it remains the most important and is still one where we have much to learn. There is a Latin proverb that says ‘Danger can never be overcome without taking risks’. As a supervisor, I would tend to rephrase that by saying that managing risks properly is the best way to overcome danger. I think this idea is at the core of any modern, innovative and dynamic economy. The next two days will no doubt offer a sense of the rich abundance of research under way to identify risks, to improve our measures for them, and to find better ways to address them. On this front, a risk manager and a bank supervisor share similar interests. A risk manager seeks the best risk measures and management techniques to protect a bank against losses, to hone its competitiveness, and to enhance its profitability and long-term growth. Supervisors advocate sound risk management practices to ensure the adequate capitalisation and prudent management of all banks.
To a degree, this residential segregation has been perpetuated by our system of school financing that relies heavily on local property tax funding. Local financing of public schools leads to a bundling of two distinct choices – residential choice and school choice – and increases the degree of socioeconomic segregation across school districts. We can promote greater income mobility by unbundling the residential and school choices. This can be done in one of two ways. The first is to work to equalize school quality across location, while the second is to allow parents more choice of schools from a given location. Along the lines of the first approach, New York Fed research has shown that school finance reforms that seek to equalize funding across school districts by reducing the role of local property taxes can go a long way in decreasing residential segregation and equalizing quality of education.6 The key mechanism is that such reforms make underperforming neighborhoods more attractive, thus reducing socioeconomic segregation and leading to consequent gains in peer quality in previously-challenged enclaves. This in turn reduces disparities in school quality stemming from reduced socioeconomic segregation. On the second approach, there exists research indicating that school vouchers that enable students to move to private schools or better-quality public schools can lead to improvements in public school quality and student performance by increasing competition among schools.7 It is important to note, though, that not all voucher programs are created equally, and the design of the program matters in how vouchers impact school quality.

It is a foundational element for a well-functioning democratic society and provides evidence about the ability of an economy to provide opportunities for its citizens. A standard approach to measuring income mobility is to compare where a child is in the income distribution relative to where the parents were in the income distribution. A striking result is that intergenerational income mobility in the U.S. – a child’s chances of moving up in the income distribution relative to her parents – has remained stable over the past half century. However, because of the increase in income inequality, the consequences of being born to low-versus high-income parents are larger today than in the past. One explanation for the lack of a correlation between income inequality and income mobility in the U.S. is that income inequality is strongly influenced by the top one percent of the income distribution, but there is little correlation between income mobility and this top income percentile.2 While income mobility in the United States has been relatively unchanged, it remains well below several other nations. According to Stanford economist Raj Chetty, the probability of moving from the bottom quintile to the top quintile is 7.5 percent in the United States, as compared to 11.7 percent in Denmark and 13.5 percent in Canada – two countries with relatively high levels of intergenerational mobility.3 So effectively the chance of achieving the American Dream is not the highest for children born in America.
Uncertainty and instability, because if imported inflation was high, and if monetary policy were to be targeted towards stable domestic prices (which is the general alternative to an exchange-rate-based regime), it may not be possible to keep interest rates low. If, heaven forbid, depegging were to be carried out in the conditions that we have now, then we might add a third word to "uncertainty" and "instability": "catastrophe", since nearly everyone seems to recognise that the worst possible time to change a fundamental monetary policy of this kind is when the economy is weak and when the outlook is full of risk. Those of you who are old enough will recall the circumstances that led to the creation of the Link in October 1983. At that time, we were facing a crisis in confidence in the future of Hong Kong, concerns about the soundness of a number of banks, and speculative attacks on the Hong Kong dollar. The crisis followed almost a decade of a floating exchange rate system, during which inflation rose to well over 10%, and sometimes hit 20%, and the value of the Hong Kong dollar declined from around five to the US dollar to a low of 9.6 on 23 September 1983. In the uncertainty that prevailed during that crisis, people rushed to the supermarket to stock up on rice, instant noodles, cooking oil, soya sauce, detergent and toilet paper, not knowing how much these basic commodities might cost in a week or a month's time.

In the European Union region, small enterprises are defined as those having 50 workers and an activity volume of 10 million Euros, while medium ones are those with 250 workers and an annual activity volume of 50 million Euros. In the kingdom of Saudi Arabia, the Saudi Industrial Development Fund adopts the criterion of the annual sales for defining small and medium enterprises whose annual sales do not exceed Rls 20 million for financing purposes according to “Kafallah” program. The World Bank has distributed a questionnaire to commercial banks to determine a definition for small and medium enterprises. The result of the questionnaire has showed that there is difference in banks’ definitions. However, it may be concluded that small enterprises are those with annual sales ranging from Rls 100 thousand to Rls 5 million and workers from 2 to 49. Medium enterprises are those with annual sales from Rls 5 million to 50 million and workers from 50 to 200. Dear audience, SMEs are characterized by many features including, simplicity of their establishment due to the low value of the capital needed for their foundation and operation, simplicity of their establishment procedures, and low cost of their establishment and administration because of the simplicity of their administrative structure. Moreover, SMEs are featured by the independent management by their owners who seek as much success as possible.
In this context, let me point out that the Lisbon European Council in March 2000 emphasised the need for economic reform, whose implementation is a key condition for the EU to achieve its strategic goal "to become the most competitive and dynamic knowledge-based economy in the world". The follow-up to the Lisbon strategy is ensured by an annual spring European Council meeting, the first of which took place in Stockholm earlier this year. These follow-up initiatives are also reflected in the recommendations of the Broad Economic Policy Guidelines. It is sometimes argued that the euro area can only become a very strong and dynamic economic entity if supported by a fully-fledged political union. I have argued today that there are good reasons that this may not be true. The current policy constitution in the euro area, despite its novelty and uniqueness, is a sound and efficient framework which provides a good basis to ensure that, even without full political union, the euro area can become one of the most dynamic economic areas in the world. BIS Review 61/2001  5

This is why our focus should be on the Eurozone economic governance and coordination. We know there is deep political resistance to sharing fiscal resources and sovereignty, as well as a rising Euroscepticism. This is why we need to make the economic case. This discussion is not about “more Brussels”, but it is very concretely about more growth and jobs in Europe. The euro crisis has revealed how unprepared we were. The absence of coordination has indeed a genuine economic cost. Several approaches point to a significant cost of noncoordination, in the order of 2 to 5 % of GDP since the crisis, and therefore millions of jobs. To bring the debate forward, some principled choices have to be made. First: making parallel progress on both domestic reforms and, [not “or”], European coordination. This is the cornerstone of, for instance, any French-German agreement: to be fair, the French call for Germany to support coordination, and the German doubt about French reforms, have been and are still well-founded. This requires overcoming distrust between countries and bringing together both aspects under the same umbrella, namely a common institution. Second, we must recognize that institutions with a mandate are superior to rules without institutions, as underlined by Mario Draghi while discussing the fundamental difference between a monetary policy institution and fiscal rules. To bolster policy consistency and coordination, we admittedly need simpler rules. But they should be supported by strong institutions with discretionary powers.
Consequently, the SNB is present in the foreign exchange market at all times and is always prepared to purchase unlimited quantities of euros at CHF 1.20 per euro, in order to enforce the minimum exchange rate. When trading took place at less than CHF 1.20 per euro, it was only for a few seconds and resulted from market idiosyncrasies. Since 6 September, the best rate in the market for the sale of euros against Swiss francs has never fallen below CHF 1.20. The SNB was thus able to successfully enforce the minimum exchange rate even under extremely difficult conditions. BIS central bankers’ speeches  3  These considerations clearly show that the introduction of a minimum exchange rate is associated with risks. Under certain circumstances, implementing such a rate can lead to a very considerable expansion of foreign currency reserves. The SNB is prepared to bear the risk. Indeed, in summer 2011, the situation had become so acute that, by early September, the SNB felt that there was no longer any alternative to introducing a minimum exchange rate. Doing nothing would have had an extremely negative impact on our economy. Even at a rate of CHF 1.20 per euro, the Swiss franc remains overvalued. We are acutely aware that considerable challenges still remain for the Swiss economy, despite the minimum exchange rate. One particular reason for this is the fact that the international economy is recovering at only a moderate pace. In addition, there is a very high level of uncertainty in the international environment.

In doing so, we take account of the development of the economy and make a contribution to the stability of the financial system. The SNB pursues a monetary policy that serves the interests of the country as a whole, and we fulfil this mandate as an independent central bank. To do this, we continue to rely on the total commitment of our staff, whom I would like to thank – also in the name of my colleague,  4  BIS central bankers’ speeches  Jean-Pierre Danthine – for their hard work and their solidarity with the SNB. We thank our shareholders for their continuing support. And we thank you all for taking such a great interest in the activities of the SNB. Finally, we would also like to thank our former colleague and Chairman of the SNB Governing Board, Philipp Hildebrand, for the good collaboration we enjoyed over the years. We very much regret his resignation and the circumstances leading up to it. Thank you for your attention. BIS central bankers’ speeches  5
Member States’ individual discipline has therefore been too weak, and collective discipline, which was nonetheless provided for in the Stability and Growth Pact, was not applied in practice. I would like to recall the spirit of this Pact. It was designed to be the fiscal pillar of monetary union. It was based on a peer-review mechanism. But, on the one hand, it was deliberately misinterpreted: whereas countries were required to maintain a fiscal balance over the cycle, without  BIS central bankers’ speeches  1  breaching the 3% of GDP reference value for the annual public deficit, they interpreted this to mean: “we can constantly run a 3% deficit”. And, on the other hand, the Pact was not respected, as sanctions were not imposed on Member States that breached these rules (including France and Germany around 2002). 2. The second cause of this crisis lies in the competitiveness gaps that had widened for a long time before the crisis. The economic rationale is easy to understand: when joining a currency area whose goal is to achieve an inflation rate of just below 2%, changes in unit production costs must be in line with this central bank objective, modulo the productivity gains. In all countries that did not abide by this calculation and this discipline, year after year, there was a loss of competitiveness that ultimately proved very significant. As regards these budgetary slippages and competitiveness losses, I hasten to add that markets did not play their role.

In fact, to some extent, it has been replaced with a virtuous cycle. As financial markets have recovered, that has led to an improvement in business and consumer sentiment that, in turn, has helped to lift the economy, spurring further gains in financial asset prices. In the same way that the improvement in market conditions is helping to support a sustainable economic recovery, the fact that the recovery in economic activity is a world-wide phenomenon helps mitigate the risk of a so-called “double-dip.” The recovery in foreign demand should help to support the U.S. economy even if U.S. domestic demand grows more slowly than anticipated. Given these developments, the consensus forecast of about 3 percent annualized real GDP growth in the second half of the year appears reasonable. BIS Review 122/2009  1  However, I also suspect that the recovery will turn out to be moderate by historical standards. This is a disappointing outcome in that growth will likely not be strong enough to bring the unemployment rate – currently 9.8 percent – down quickly. I see three major forces restraining the pace of this recovery. First, households are unlikely to have fully adjusted to the net wealth shock that has been generated by the housing price decline and the weakness in share prices. Peak to trough, home prices nationwide have declined by 11.5 percent measured by the FHFA (Federal Housing Finance Agency) index and by 32 percent according to the 20-city Case-Shiller index.