samchain/econo-pairs-v1 huggingface dataset:
While the deficit had been reduced from almost 10% of GDP in 2003 to 2.2% in 2007, it widened in the following two years and the latest projections, those of the EC, suggest that the shortfall will increase further to 4.3% this year, before declining to 3.6% in 2011. 9 These projections imply that the debt-to-GDP ratio in 2011 will stand at roughly the same level as in 2004, around 72%. These ratios are higher than those contained in the Government’s Stability Programme since the EC follows the “no policy change” rule and also because of differing macroeconomic assumptions. A credible fiscal consolidation strategy involves achieving a primary surplus that is sufficiently large to place the public debt on a stable, and eventually declining, path. For this purpose, additional measures beyond those announced in the latest Stability Programme would be required in order to comply with the recommendation under the Excessive Deficit Procedure to bring the deficit below 3% by next year. This accelerated consolidation is also necessary in view of the anticipated increase in spending on health care and pensions associated with an ageing population. Life expectancy in Malta in 2008 was 76 years and 81.1 years for men and women, respectively, and the population aged 65 or over as a proportion of the working age population is expected to rise progressively from 21.2% today to 59.1% in 2060. 10 Looking ahead, the ability of the economy to benefit from the incipient recovery in external demand through export growth hinges on its competitiveness.

Credit measures amount to some 15% of GDP, mainly around a medium-term liquidity facility to banks conditional on credit expansion. This provides 4-year loans at the 0.5% policy rate, conditional on growth in corporate and consumer lending, increasingly weighted towards SMEs. This has provided the liquidity match to a government scheme providing guarantees to working capital lending under favorable financial terms. c. Liquidity and other market-stabilizing measures add up to some 7% of GDP. These include a mediumto long-term asset purchases that also provide unconventional monetary policy tools. Page 2 of 3  Central Bank of Chile June 2020  d. The response of bank credit to the Central Bank’s FCIC and the government-funded FOGAPE guarantees has been largely positive. Corporate lending has been growing at 10% year-on-year over the last three months, making it the first case of countercyclical lending in recent history. e. In particular, banks have used liquidity to allow the drawdown of credit lines by corporations, 1.2 million rollover operations and 120,000 working capital loans with a SME share largely above historical averages. f.  Long-term interest rates have responded well to monetary policy decisions, forward guidance and non-conventional tools. After the June monetary policy meeting and the release of our Monetary Policy Report, 10-year bond rates dropped some 40 bp. g. Central Bank measures extend well beyond the immediate emergency and are likely to foster economic recovery once containment measures begin to roll back.
The fact that this would happen is something we have foreseen for a long time, although not that it would happen as soon and as quickly as it actually has. This has also led to the forecast for productivity for the whole of 2007 being lowered as early as June. But I did not see any reason to change the forecast for productivity for coming years; my assessment was still that productivity would recover. This was because I viewed the slowdown in productivity as temporary. But productivity is a factor that is difficult to assess – there is a risk that the slowdown will be prolonged and lead to stronger cost pressures. This was one of the risk factors we noted in the June Monetary Policy Report. The assessment in September was that food prices would contribute to higher inflationary pressures than we had previously anticipated. If we look at how inflation has developed in recent months, the forecasts from June have been relatively accurate. In August inflation was actually completely in line with the forecast, although it had been slightly higher earlier in the summer than we had forecast in June. The assessment we made in September was that economic activity in Sweden actually looked slightly stronger than we had anticipated in June and that cost pressures had risen. We therefore decided to raise the repo rate to 3.75 per cent. This could in itself also motivate a slightly higher interest rate path.

The interest rate decision in September Let me move on to the stance I took at the most recent monetary policy meeting around a month ago. I, like the rest of the Executive Board, then voted to raise the repo rate by 0.25 percentage points. At the same time, my assessment was that the forecast for the repo rate that we made in June still appeared reasonable. Today I shall return to why I made this assessment. Increased uncertainty abroad… On the whole, my view in September was that international growth was good and had not changed significantly since June. But this does not prevent the view of growth in some individual countries having changed in important respects. In September our assessment was that growth would be lower than we had expected in June, in the United States in particular, but also in Europe. At the same time, developments were slightly stronger in a couple of our neighbouring countries and in several emerging markets. However, the international risk outlook had changed gradually in connection with the rising unrest in the financial markets. The change in the risk outlook largely originated in the United States. There the problems in the housing market had worsened and according to several statistics house prices in the United States fell on average, measured as an annual change. The question we asked ourselves at the September meeting was to what extent the problems would spread and slow down activity in the rest of the US economy.
In contrast, the UK banking system has, I have noted, so far been able to absorb the initial surge in demand for credit from firms6 and extend payment holidays to households. The FPC stress test indicates that banks have the resilience to continue to maintain credit to the real economy. Admittedly, given the risk around economic prospects and the impact on firms, much of the additional lending that is necessary needs to be supported by government guarantee. But we would be dealing with a very different credit environment now absent the resilience – both capital and liquidity – that has resulted from the post crisis reforms. The FPC stress test also illustrates one of the key lessons of the great financial crisis, that if banks have resilience and can use it to help to maintain credit in the real economy in a stress rather than deleveraging, the outcome is in the end better for banks themselves. The capital they might preserve by deleveraging is 4  Since the 2008/09 financial crisis, the Bank has increased the range of collateral it accepts, which now extends to loans and a wide range of securities. 5 To take a very simplified example: the aggregate CET 1 ratio of major UK banks was around 4.5% in 2007 (compared to over 14% now). A 3.8 percentage point capital drawdown (the drawdown we expect banks to face in the MPC’s illustrative scenario) would have depleted a very significant fraction of the capital banks had available.

12  Some US equity markets recently reached record highs, both the FTSE 250 and the S&P 500 have gained over 40% from their March lows, and sterling 3m and USD 3m LIBOR rates have come in 70bps and 81bps respectively from their crisis highs 10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  I would at this stage identify a number of areas that will likely merit further consideration in a comprehensive, evidence based, analysis of how stress evolved over the initial phase of the COVID crisis and whether and how market dysfunction could have been prevented without huge central bank intervention. Market liquidity broke down very quickly in dealer intermediated corporate bond markets and EME asset markets. This, bluntly, was no great surprise. The potential illiquidity of these markets under stress has been well known to regulatory authorities and market participants for some time.13  These markets are now very large. The global stock of non-financial corporate bonds at the end of 2019 reached an all-time high of $ trillion, with the stock of emerging market corporate debt around $ We need to examine the extent to which their illiquidity contributed to pressure on asset prices and liquidity elsewhere, given the desire of many of the holders of these assets to shift their portfolios to more defensive positions and to increase cash holdings.
But the regeneration of urban communities, and the efforts of British Waterways, have reversed this decline. The number of miles is now increasing. Last year, 13 million people visited our canals and the number of boats is actually higher now than during the Industrial Revolution. Such examples are important because our economy faces the prospect of change again. After an unprecedented financial crisis and deep recession, the UK economy needs to rebalance. Tonight I want to talk about what those changes will entail and the role which the Bank of England can play in supporting them. The Bank of England’s key role has always been to ensure that the economy is supplied with the right quantity of money – neither too much nor too little. For fifty years, my predecessors struggled to prevent there being too much, so leading to inflation. I find myself in the opposite situation having to explain that there is too little money in the economy. But, in the wake of the financial crisis, and the sharp downturn that followed, the amount of money in the economy as a whole – broad money – is now barely growing at all. That is restraining activity and pushing down the outlook for inflation. So the Bank of England has taken extraordinary monetary policy measures – through our so-called “quantitative easing” programme of asset purchases – to ensure that the amount of money starts growing again in order to support a recovery and keep inflation on track to meet our target in the medium term.

  10  Visa Europe, based in the UK and a subsidiary of Visa Inc, executed all 18.9 billion Visa transactions in Europe in 2015. These peaked at 2,000 transactions per second in the pre-Christmas period. 11  And third, although each of the pipes is distinct and serves a discrete purpose, they operate together to provide a seamless global network of functions that Michael Godfrey could not have imagined. The operations behind a routine financial transaction – issuing corporate debt, adjusting a pension fund portfolio or hedging against the risks of commodity price increases – will typically involve a wide range of financial market infrastructure firms over many jurisdictions (see diagram A). 8  https://www.cmegroup.com/company/files/cme-group-overview.pdf http://www.eurexclearing.com/clearing-en/about-us 10 http://www.swapclear.com/what/clearing-volumes.html 11 https://www.visaeurope.com/enabling-payments/processing 9  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Diagram 1: Example of an international commodity hedge  Diagram 2: Example of equity issuance  6  All speeches are available online at www.bankofengland.co.uk/speeches  6  These global pipes have proved pretty robust. In the last crisis financial market infrastructure proved resilient, including during the most testing time of Lehman’s collapse. But their use is growing, in part because they increase efficiency and lower cost – and in part because they reduce risk and authorities have mandated market participants to use them. 12  In line with this, post crisis, authorities internationally agreed that there needed to be a corresponding increase in the regulatory expectations of FMIs.
The G20 has agreed a wide range of regulatory standards and put in place the mechanisms for deep supervisory cooperation. These Financial Stability Board (FSB) reforms create a platform for cross border financial services between different legal systems and regulatory approaches that achieve similar outcomes for financial stability. This avoids unnecessary  25  See Carney, M (2016), ‘The Spectre of Monetarism’. Rodrik, D. (2011). The globalization paradox: Democracy and the future of the world economy. 27 See Carney, M (2017), ‘A Fine Balance’. 28 Sales are increasingly taking place on-line and over platforms, rather than on the high street. Intangible capital is now more important than physical capital. A hyper-connected, capital-light world, could offers a future that increasingly belongs to small and medium-sized firms, with platforms (such as taskrabbit, Amazon, Etsy, Shopify, and SamaHub) giving them direct stakes in local and global markets. 26  16  All speeches are available online at www.bankofengland.co.uk/speeches  16  duplication and costly fragmentation while promoting greater competition, enhanced resilience and improved efficiency to the benefit of all our citizens. Conclusion: Is this How the Expansion Ends? Although the economic and financial imbalances in the global economy do not yet appear to contain the seeds of their own demise, global momentum is softening. Monetary policymakers may need to be disciplined and macroprudential authorities, vigilant. Risks from China and from de-globalisation are significant and growing. Could they be how the expansion ends? Protectionism appears already to be having an impact.

One complication is the lack of clear signs stating the speed limit - in other words; there is always uncertainty over where the capacity ceiling lies - or how high the Swedish economy's potential growth rate is. At the Riksbank we have previously estimated this to be approximately 2-2.5 per cent. Today, when we conclude that the inflation tendencies in the Swedish economy appear to have been higher than we had previously realised, one of the possible explanations is that we may have over-estimated the Swedish economy's production capacity. The Inflation Report to be published in March, which will form the basis for our decision on the interest rate  2  BIS Review 14/2002  at our next monetary policy meeting, will provide an overall assessment of resource utilisation and inflation. Economic progress in the 1990s In the seam between the 1980s and 1990s, we had a clear overheating of the Swedish economy, despite the fact that growth had been a modest 2 per cent a year during the 1980s. Over the past five years, the economy has grown by 3 per cent a year without the corresponding worries. Something has evidently changed for the better. My opinion is that the reason is positive changes particularly in four areas important for growth: the macroeconomy, increased competition, trade and developments in technology. I shall briefly discuss these and then, in conclusion, say a few words about the challenges I see for the Swedish economy at present. Economic policy has changed in different stages during the 1990s.
As Iceland's growth period progressed, symptoms emerged of the economic overheating which has been one of the main concerns of the Central Bank in the implementation of monetary policy in recent years. For the Icelandic economy, the period from 1990-1995 was one of stagnation, apart from 1994 when growth shot up to 4.5%, only to fall back to virtually zero the following year. In 1996, however, the growth phase began which we have been enjoying ever since. Over this period, the entire output gap that was present then was closed, and more besides. National expenditure has been growing at a faster rate than national income, resulting in a large current account deficit. National expenditure rose by more in 2000 than the preceding year, so the current account continued to widen. GDP growth was less than the year before, although it did not slow down sufficiently to ease output pressure. In all likelihood, the overheating that has characterised the Icelandic economy in recent years peaked in 2000, since there were indications of a slowdown in domestic demand growth in the course of the year, although it remained very strong. The outlook is for a substantial reduction in the rate of economic growth in 2001. Clear signs of overheating were seen in the labour market. Seasonally adjusted unemployment decreased from 1.5% in January 2000 to 1.2% in July, then remained unchanged to the end of the year.

In weighing up this decision, interest rate reductions among some of Iceland's trading countries in recent months have also been taken into account. Exchange rate To reiterate, the main objective of monetary policy is price stability. Since the exchange rate is an important determinant of prices, exchange rate stability has been an intermediate objective of monetary policy. During the first four months of last year the króna appreciated somewhat, but this trend was reversed in the middle of June and the currency was under pressure for most of the time until the end of the year. It depreciated by almost 9% from the end of 1999 to the end of 2000. To some extent the depreciation was triggered by fishing quota cutbacks and the resulting deterioration in the economic outlook. Demand for foreign exchange also outstripped supply because of last year's current account deficit, which is estimated at ISK 68.9 billion, as well as heavy investment by Icelanders in foreign securities amounting to almost ISK 40 billion net. Pension funds play the leading role in these investments. By the end of 2000, the real exchange rate of the króna had fallen below its average for the past twenty years. Actions in the foreign exchange market Under the prevailing circumstances, the Central Bank considered it necessary to take action to counter the depreciation of the króna. Besides raising its interest rates, the Bank intervened in foreign exchange markets thirteen times after the middle of 2000 in order to cushion against sharp fluctuations.
On the one hand it is difficult to measure these intangible assets, but on the other hand one disregards a large part of the companies’ investments if one does not take them into account. US and European studies show that investment in intangible assets comprises around 10 per cent of GDP. 11 The most recent productivity growth and forecasts Let me now comment on the development of productivity last year and during the period to come. 7  Bloom, Sadun and Van Reenen (2007). 8  Håkanson (2007). 9  By productivity is meant total factor productivity, TFP. In the study the comparison has been made with the median company. 10  Brynjolfsson and Hitt (2003). 11  See, for instance, Corrado, Hulten and Sichel (2005), (2006), Hao, Manole and van Ark (2007), Haskel and Marrano (2007). 4  BIS Review 12/2008  Productivity growth in the business sector has been 4.4 per cent a year during the period 2002-2006. In the increasingly mature phase of the economic cycle where the economy is now, it is normal for productivity growth to slow down in connection with an increase in employment. This is also something the Riksbank has been expecting. However, the downturn in the rate of increase in productivity last year was stronger than motivated by the prevailing economic situation and the Riksbank, like many other analysts, was surprised by the strength of the downturn.

There are also signs that the strong growth in productivity that has been evident in other countries – for example in the US – is moderating somewhat. And we may see a similar trend in Norway. Second, even without a reversal, profits may fall and unemployment rise. The implications of this will depend on how far businesses, in their search for qualified labour, will go in bidding up wages. It will also depend on how wage-earners react and on their ability to adapt to change. Furthermore, it must be expected that the strong krone will shave profits in some enterprises and industries at the moment, even though many have used currency hedging to safeguard their income. Even though demand for labour is strong, there is a risk that outflows from the labour market to various social security schemes will remain high. Sickness absence is high, and the share of the working-age population on rehabilitation schemes or receiving disability pensions is rising. Many workers choose to take early retirement under the AFP scheme (contractual early retirement) when they reach 62 years of age, and – because this age group is expanding sharply – this number will probably increase in the years ahead. In Norway, close to 600 000 persons of working age receive social security benefits or pensions. This is equivalent to 25 per cent of the labour force. This is the Norwegian economy’s Achilles’ heel. A particularly disturbing aspect is that disability is increasing among young people 1 .
A third adverse side-effect was that workers did not always benefit, fully or immediately, from technologically-induced gains in companies’ productivity and profitability. In the early stages of each industrial revolution, wages tended not to rise in line with productivity, causing labour’s share of the national income pie to fall. 29  This, too, tended to add to popular discontent and damage social cohesion. Labour’s  income share has also fallen in a number of advanced economies over the past few decades. 30  A final side-effect is that periods of technological transition were often lengthy as well as painful. In the first Industrial Revolution, many displaced workers had still to find alternative work by the middle of the th  19 century, with income inequality running high and labour’s share falling. This period is known by historians as “Engel’s pause”. 31  Subsequent industrial revolutions have seen similar, if less long-lived,  pauses. If economic hardship is widespread and social cohesion damaged, a societal response is needed. One such response is the creation of new pieces of social infrastructure – in other words, institution building. Each industrial revolution saw a surge in such institution-building, to cushion the adverse side-effects of technological change on jobs and pay. In this way, the recessionary hit to workers and the economy could be shortened or dampened. Broadly speaking, two such sets of institution emerged. One set equipped workers with the new skills they needed to thrive in a new jobs environment.

Since at th  least the middle of the 19 century, the Bank of England has become one of the key institutional safeguards against recession risk and financial crisis. 41  Indeed, today, those roles are defined in statute. Non-state institutions have also played an important role in protecting those facing the adverse side-effects of economic change. This included many religious, philanthropic and charitable organisations and citizen th  movements that emerged from the 18 century onwards, often as a direct response to hardship brought about by technological change. These institutions offered, and many continue to offer, a combination of financial, housing, training and emotional support to those in need. 39  Clark (2009). Figures refer to government command of output as a percentage of GNP in England. Other 19th century legal changes that supported individuals from adverse side-effects of economic change included recognition of limited liability companies and constraints on the ability of courts to sentence debtors to prison. 41 Anson et al (2017), for example, discuss the emergence of the Bank of England as lender of last resort. 40  11  All speeches are available online at www.bankofengland.co.uk/speeches  11  To mention one, the Young Men’s Christian Association (YMCA) was founded in 1844, at around the time of Engels’ pause. It was established explicitly to meet the housing and social needs of young men who had moved from rural towns and villages to find work in factories in the cities.