samchain/econo-pairs-v1 huggingface dataset:
Foreseeably, demographic changes will affect consumption and saving patterns and tend to reduce productivity growth. This is why I must stress that addressing the population challenge calls for the adoption of a multidisciplinary strategy. Among other aspects, this strategy must encourage the participation of older workers, tailor migratory policy to labour market needs and boost the birth rate. In this scenario, education and vocational training policies are crucial. 8/18  Fourthly, the unemployment rate remains very high (14.7% in 2019 Q1), despite the fact that since the onset of the recovery almost 2.5 million jobs have been created. Moreover, around 45% of the unemployed have been looking for a job for a year or more. Improving the employability of the most vulnerable groups – namely youths and elderly workers, in particular the least skilled – is essential to reduce this scourge and thus help correct the strong rise in wage inequality that stemmed from the crisis. In this respect, it would be desirable to improve the human capital of the least skilled unemployed and to align job training measures to employers’ demands. These measures should be structured to fit others aimed at reducing the high temporary employment ratio, in light of its negative influence on human capital accumulation – to which I shall refer later – and, once again, on inequality. Indeed, despite trending more favourably over the past year, the temporary employment ratio stood in 2019 Q1 at almost 26%, far above that in other European countries.

In New Jersey, private-sector job growth was quite robust in the fourth quarter, despite a small dip in December. New York State, in contrast, slowed more in December and has seen only minimal job gains since we last met in August. 2  For more information, see Indexes of Coincident Economic Indicators on the New York Fed website. BIS central bankers’ speeches  3  Job growth in the region no longer appears to be out-performing the nation, and regional unemployment rates remain unacceptably high: at around 9 percent in both New York City and New Jersey, and close to 8 percent across New York State. Turning to New York City, the local job market, which had been quite resilient during and after the recession, has lagged recently – partly reflecting weakness in the city’s securities industry. Still, the Big Apple has recovered over half of the jobs lost during the recession, whereas the nation has recouped only about a third of its job losses thus far. Despite recent weakness in the securities industry, other industries, such as tourism, and professional and business services, have fared reasonably well in the City. Weakness in financial activities industry – and securities in particular – is worrisome because this sector has tended to drive overall local growth and provide a major source of tax revenue for the city and the state. The New York Fed also conducts the Empire State Manufacturing Survey to track conditions for regional manufacturers.
BIS Review 4/2003  1  Output gap Per cent of trend GDP 6  6  5  5  4  4  Hodrick-Prescott method  3 2  3 2  Production function method  1  1  0  0  -1  -1  -2  -2  -3  -3  -4  -4  -5 -5 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002  Sources: Statistics Norway and Norges Bank SG Gausdal 31.01.03  At the beginning of the 1990s, the economy was in a deep recession. Production was well below 1 capacity. When growth in the economy picked up, capacity utilisation increased. The output gap , according to our methods of calculation, was closed around 1996. Thereafter, cost inflation and the rise in prices for goods and services produced for the domestic market accelerated. The upturn reached its peak in 1997, with GDP growth approaching 5 per cent. The pace of such a strong upturn could not be sustained. In 1997 and 1998 the economy shifted from an upturn with high growth rates to an expansion with lower growth but low unemployment, labour shortages in many sectors and strong growth in labour costs. Stock market prices in Norway and the US Monthly figures.

This wage gap also provides an indication of pressures in the real economy, not unlike the measures of the output gap shown earlier. As illustrated,  2  The wage gap is calculated as the difference between the rise in labour costs in manufacturing in Norway and 4.5 per cent. The wage gap is calculated as the difference between the rise in labour costs in Norway and trading partners in the years prior to 2001.  there tends to be a correlation between the wage gap and the output gap. The output gap can be an expression of our assessment of pressures in the economy. The wage gap can be a more direct indication of the social partners’ perception of the situation. This provides useful information in interest rate setting. Moreover, wage figures and wage growth estimates in real time are considerably more reliable than preliminary national accounts figures for output and demand that are used to estimate the output gap, which tend to be subject to substantial revision. The wage growth estimates drawn up by Norges Bank early last summer, just after the income settlements, underestimated the increase by 0.16 percentage point, with small deviations, on average for the period 1995-2001. On the other hand, the wage gap is a lagging indicator. Wage growth in any one year has been heavily influenced by economic developments in the preceding 12-18 months.
In the background memorandum published in conjunction with the decision to abolish, the Riksbank argued that the interval had become obsolete since target deviations greater than 1 percentage point had become a natural part of flexible inflation targeting and that the credibility of the inflation target was not questioned even when inflation was outside the tolerance interval. 25 In retrospect, it is reasonable to ask whether the problem was not just the fact that the interval chosen was poorly adapted. Despite this, the idea as such of an interval around the target does not necessarily have to be a bad one. A better adapted interval may bring with it the advantages envisaged in the first place. It would signal that monetary policy is being conducted amidst considerable uncertainty and that the Riksbank is unable to fine-tune the economy and inflation. This is something that is good to remind people of on a more or less continual basis. In the same way as there may be reason to discuss a change of target variable, there may, in light of this, be cause to consider whether a tolerance interval should be reintroduced. I find it difficult, however, to see how an interval could normally change the practical prerequisites for monetary policy very much. The Riksbank has not had any rigid fixation with pinning the inflation target at exactly 2 per cent at all times, but an explicit target is nevertheless necessary as a guide to monetary policy and inflation expectations.

The slow and uneven vaccine rollout, even in some advanced economies, and its very limited availability in the LICs are matters of serious concern. Enabling global access to effective and affordable vaccines is a global responsibility, and an ethical and moral issue. We support the Managing Director’s Global Policy Agenda (GPA) and its wellplaced focus on creating conditions for a safe exit from the crisis followed by a sustained, strong and inclusive global economic recovery. We welcome the GPA’s recognition of difficult challenges facing many developing countries in pursuing their development and social objectives, while facing severe financing constraint and high debt. We further welcome the increasing IMF emphasis on middleincome countries as many face stalled growth and large financing needs in tighter market conditions. Our constituency is a heterogeneous group of countries and a mix of fragile and conflict-affected states, middle-income and frontier economies, and oil exporting countries. The crisis has severely impacted all countries of our constituency. Our authorities reacted swiftly to the crisis and implemented measures to alleviate its impact on lives and livelihoods, with some of our members benefitting from Fund emergency and/or Upper Credit Tranche (UCT) facilities. The economic recovery is gradually taking shape in our constituency, but at varying pace and degrees. The rebound of international oil prices provided welcome relief to oil exporters in our constituency, but financing pressures continue to persist, and economic diversification challenges remain.
And I will frame my contribution in terms of the use the MPC has made of what has come to be known as the “monetary policy toolbox”: the range of policy tools that MPC has used so far, what tools are available to us now, and which ones we might decide to use in the near future. The idea of a range of monetary policy tools is itself quite a new one. For many years monetary policy makers used one tool, the policy rate, to achieve their goal – in the UK case, that meant Bank Rate. And the Bank used a small, focused set of central balance sheet operations to keep money market rates, and so rates in the wider economy, close to that policy rate. Two developments changed all that: first, the secular decline, over several decades, in the trend real interest rate; and second, the global financial crisis and the great recession that followed it. 1 The trend real rate – big R*, in central bankers’ jargon - has fallen over the past few decades across advanced economies. Figure 1, taken from the August 2018 Inflation Report, sets out the MPC’s view of what explains that fall. Much of it can be explained by structural factors such as an ageing global population, which have raised the demand for savings. Other structural factors, including a decline in trend productivity growth, have reduced businesses’ demand for capital.

HB: What needs to be changed? Trichet: We certainly do need change in Europe – fundamental change. Not only in the area of surveillance and monitoring of fiscal policy, but also as regards structural reform policies and competitiveness policies. HB: Examples? Trichet: We need to improve drastically everything: the quality of the diagnosis and recommendations by the Commission, much more stronger procedures – and where necessary automatic procedures and tools – to prevent ex ante bad policies, and much more effective sanctions ex post. I will make all these points with the greatest energy in the Van Rompuy Committee. HB: Will the measures adopted by the ECB now dampen growth in Europe? Trichet: No. It is a complete fallacy to say that fiscal soundness dampens growth. It is exactly the contrary. It is the absence of fiscal credibility which dampens growth. Medium term sound and credible fiscal policies are a major prerequisite for confidence. And confidence of the households, confidence of the entrepreneurs and confidence of the investors is what is indispensable for the recovery. HB: Did you ever think that you would have to take such difficult decisions as President of the ECB? Trichet: I have had to take difficult decisions throughout my career – including as President of the Paris Club in the 80’s and Chairman of European Monetary Policy Committee in the 90’s as well as Governor of the Banque de France.
The latter, moreover, would be of direct benefit in terms of price competitiveness, as would be the reduction in currency conversion costs and the increased price transparency. Our assessment also shows that Malta is well suited to participate in the euro area. Its economic structure bears a fair degree of similarity with the euro area and both trade and financial linkages are substantial. Furthermore, the lira is already closely linked with the euro so that joining the euro area does not entail a radical change in the parameters applicable to macroeconomic policy setting in Malta. At the same time, most of the formal requirements for entry, with the exception of the criteria on public finances, have been, or stand a good chance of being met on a sustainable basis. As far as public finances are concerned, moreover, the fiscal consolidation process is on schedule, as the EU Council has acknowledged, with the target deficit/GDP ratio for 2004 achieved. A positive track record of exchange rate stability has meanwhile cultivated expectations abroad that Malta will not remain outside the euro area more than is necessary. A delay would thus send the wrong signals to international investors and could well reverse the upgrade in Malta's credit rating as this was partly a response to expectations that Malta would proceed with economic reform at a steady pace to adopt the euro as soon as conditions allowed.

It was once widely held that monetary policy could achieve somewhat lower rates of unemployment by allowing somewhat higher rates of inflation, and that it could do this without risking a  BIS Review 54/2006  1  substantial acceleration of inflation. This view proved to be mistaken because it did not correctly account for the role inflation expectations played in inflation dynamics. Economic concepts that are critical to our understanding of the economy may be difficult or impossible to capture in practice. One such concept is the neutral or equilibrium interest rate, which is the rate that, if sustained over some period of time, is likely to be consistent with an economy growing at potential with low inflation. Plausible estimates for the prevailing level of this rate have a range of at least 100 basis points, and the center of the estimates tends to move around quite a bit. Another concept that is difficult to estimate precisely is the economy's potential, or sustainable, growth rate. The acceleration in productivity growth in the United States in the late 1990s, for example, led us to revise our estimates of how fast the economy was likely to be able to grow at that time without undermining price stability. We also face considerable ignorance about the precise channels through which policy actions ultimately affect the economy, as well as how long those effects will take to show up and how large they will be when they do show up.
On the other hand, a central bank like the Riksbank has considerable responsibility with regard to managing the consequences of a financial crisis and can therefore also be assumed to have a strong interest in preventing such crises from arising. At the same time, a central bank does not have so many instruments to try to influence developments such as credit growth and asset prices. The policy rate is a fairly blunt instrument in this context. This does not mean that financial indicators are not taken into account in interest rate decisions, which has been the case in Sweden on a number of occasions. But there is also reason to consider the possibility of using other tools than the policy rate. In this speech I shall begin by describing the causes behind the crisis. In this context I will explicitly discuss the question of to what extent monetary policy in the early 2000s might have contributed to developments. I shall argue against the opinion that monetary policy was a crucial factor behind the financial crisis. This does not mean, however, that I do not consider there are arguments in favour of central banks being more active when there is a risk of bubbles building up. I shall attempt to develop these arguments here today. A financial crisis with substantial consequences for the real economy The financial crisis that escalated in autumn 2008 in connection with the Lehman Brothers bankruptcy is the largest since the Great Depression at the end of the 1920s and early 1930s.

Turning to today’s conference theme of “On the Horizon for Community Banking,” I have a few observations that I’d like to share. These observations, in part, preview the day’s agenda and I look forward to the continued conversation on these important issues. First, our country and the banking industry have benefitted from steady economic growth, modest inflation, and low unemployment in recent years. These are all positive and welcome outcome, but not all regions have benefitted equally here in the Second District. Some portions of upstate New York have benefitted from an influx of technology companies and other industries, while other regions remain challenged due to a lack of population growth. Later today we will hear from two of our economists who will share national and regional economic trends. Also in the spirit of looking forward, I can share some views on what community bankers can expect from the supervisory process. Examiners are keenly focused on emerging trends around funding costs and liquidity risks. Bankers consistently share with us the challenge of raising core deposits to fund loan growth. Community banks compete not only with other community banks for deposits, but also with credit unions and larger institutions. And, these larger counterparts are actively courting customers through direct mailers and offering competitive rates. Data in the Second District show cost across most deposit categories have increased with a slight uptick in the higher cost funding sources such as borrowings. Data for the largest banks exhibit a comparable trend, but they control a larger market share.
So, future work should concentrate on how to make the rating process clearer and more explicit and to preserve and strengthen its integrity. A second, alternative view, on the collapse and confidence and liquidity would point at the inadequation of capital to risk in the new securitized model. Ultimately, the ability of an investor to carry risk is determined by her capital base. Capital must be sufficient to absorb the potential losses if risk materializes. If not, confidence may vanish and liquidity may disappear. To quote Stephen Cecchetti 1 , "in the context of financial intermediaries, capital plays the role of collateral". So, for the securitized model to work, there cannot be too big a disconnect between the allocation of risk and capital in the system. This is true both at the aggregate level and for each individual issuer of securities. At the aggregate level, insufficient capital leads to excess leverage and, as a consequence, to excess fragility. For each individual issuer of securities, carrying risks with little (or no) capital increases the probability of a liquidity crisis. It may be that, as time goes by and we look more closely at what happened, this second view will gain in importance. I would note that cracks occurred in those places – the conduits and especially the SIVs – where there was no capital available to absorb shocks.

But, as I said, now is the time to analyze and think. BIS Review 128/2007  3
Constantinos Herodotou: Sustainability, digitization, profitability Statement of Mr Constantinos Herodotou, Governor of the Central Bank of Cyprus, at fireplace chat "Challenges for banks in a new operating environment" at the 10th Banking Forum, Nicosia, 9 December 2022. *** I would first like to thank Andrea for accepting my invitation to participate at today's event and share his valuable insights with us. In the aftermath of the two consecutive crises, the first round adverse effects have been limited for the banking sector. Nevertheless, with the level of uncertainty still tilted to the upside, the full extent of the consequences has not yet materialised especially in the area of credit risk. If we were though to draw a lesson from both crises, this would be the significance that technology plays for the banking sector, not only for the conduct of the normal banking operations but also for the sustainability of its profitability. The banking sector has proven resilient and continued to provide credit to the economy. However, the legacy structural weaknesses of the sector remain. At the same time, competition from challenger banks has been increasing. Therefore, the banks need to move more decisively in the road to digital transformation. This is presumably the only way if they are to address their structural weaknesses while retaining their competitive advantage against new players in the market. Investing in technology can become the catalyst in their effort to strengthen efficiency and build sustainable profitability.

The banks have a key role to play in this effort through financing the transition as well through providing adequate disclosures to the markets. We therefore expect them to adopt both their business models and risk  1/2  BIS - Central bankers' speeches  management frameworks to incorporate climate and environmental risks. The fact that certain banks have started making tangible steps in this regard is a positive development, but there is still some way yet to be travelled. The management of climate risk by banks is on the top of the supervisory agenda. We acknowledge the challenge that this poses especially for smaller banks. However, we do expect them to act more decisively in the said direction. By default, this will ultimately also target the banks' clientele and the submission of detailed climate related information in order to feed the banks' risk management processes. The challenges noted above, require significant up- front investment before reaping the benefits. The banks should proceed without undue delays to the transformation of their business models to address a new challenging business environment. Complacency emanating from short term profits is not a viable option. Sustainability through transformation is the way forward. Thank you. 2/2  BIS - Central bankers' speeches