samchain/econo-pairs-v1 huggingface dataset:
(a) Saving ratios calculated using the average consumption and disposable income levels for each group of households. Numbers in parentheses show their share of total income in 2007. Shares do not sum to 100 due to rounding. (b) High-debt mortgagors are defined as having outstanding mortgage debt of more than twice their annual disposable income. All other mortgagors are low debt. Chart 2: Ratio of UK exports to UK-weighted rest of G7 imports(a) Indices: 2003 Q1 = 100 140 Goods  130  Services  120 110 100 90 80 70  1994  1997  2000  2003  2006  2009  2012  Sources: Eurostat, Japan Cabinet Office, ONS, Statistics Canada, Thomson Reuters Datastream, US Bureau of Economic Analysis and Bank calculations. (a) Chained-volume measures of UK goods (services) exports divided by real imports of goods (services) in Canada, France, Germany, Italy, Japan and the United States, weighted using UK 2011 goods (services) export shares from the 2012 Pink Book. UK goods exports data have been adjusted for MTIC fraud by an amount equal to the ONS goods import adjustment. BIS central bankers’ speeches  7  Chart 3: Net international investment positions (% of GDP) Percentage point changes since 2000 Germany France Greece  Ireland Italy  60  Spain Portugal  40 20 0 -20 -40 -60 -80  -100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012  Source: Eurostat.

Chart 8 indicates, however, that much of that is attributable to the substantial fall in imports associated with the collapse in domestic demand, rather than a rise in exports (although to the extent that there was excess demand before the crisis – as Chart 4 suggests – part of that decline in imports will be warranted). Moreover, the necessary sectoral reallocation of resources is harder to achieve in a currency union than in a country with its own currency, as the exchange rate is not free to adjust to expedite the necessary adjustments in prices and quantities. Absent a supply-side miracle to  2  As productivity tends to rise faster in manufacturing than services, unit labour costs on average rise faster in non-tradables than tradables. But, as Chart 7 makes clear, the gap was much greater in Spain than Germany. 2  BIS central bankers’ speeches  raise productivity in the periphery, the necessary reversal in the movements in relative unit labour costs needs instead to come about through wage and price adjustment, which may require a sustained period of spare capacity in the periphery together with excess demand in the core. There is, however, an inherent asymmetry, noted long ago by Keynes, that when credit flows dry up, adjustment is compulsory for the debtor but only voluntary for the creditor. Moreover, not only does the creditor lack the urgent need to adjust, they may also feel that the debtor ought to bear more of the burden of adjustment on moral grounds.
In associated guidelines, a number of such services are identified including:   Taking, managing and transferring deposits;    Providing flexible payment mechanisms such as debit cards;    Making loans or other investments; and    Offering financial advice or other business services. FISIM is estimated for loans and deposits only. The calculation is based on the difference between the effective rates of interest (payable and receivable) and a “reference” rate of interest, multiplied by the stock of outstanding balances. According to SNA guidelines, “this reference rate represents the pure cost of borrowing funds – that is, a rate from which the risk premium has been eliminated to the greatest extent possible, and that does not include any intermediation services”. 2 For example, a £ loan with a 9% interest receivable and a 4% reference rate gives current price FISIM on the loan = £ x (9%–4%) = £ And for a £ deposit with a 3% interest payable and a 4% reference rate, this gives current price FISIM on the deposit = £ x (4%–3%) = £ Overall, estimated current price FISIM accounts for a significant share of gross output of the banking sector (Chart 7). Estimating a real measure of FISIM is fraught with both conceptual and computational difficulties. In the earlier example of the second-hand car dealer, statisticians can use the number of cars sold as an indicator of the volume of gross output. But the conceptual equivalent for financial intermediation is not clear.

Our collective efforts, along with developments in information technology and risk management techniques, have already contributed to improved market stability. The growing, and successful, commitment of central banks to the achievement of price stability as BIS Review 60/1997  -7-  their primary goal is another crucial and positive contribution toward market stability. Moreover, where we as central banks see gaps that develop in the global financial system, as we did in the areas of market risk and settlement risk management, we play the role of facilitator to private sector solutions. As central bankers, we tend to view our role in the global financial markets as ensuring that the necessary infrastructure is in place to promote well-functioning markets for all players. Then we step aside and let the markets take care of themselves. BIS Review 60/1997
Similar to the experience in the GBP bond markets, compounded in arrears rates have quickly established themselves as a robust and useable market standard. They offer borrowers a transparent rate based on substantial volumes of real transactions and lenders a durable rate that will function through a range of scenarios. It is promising to see the progress made in SONIA and as liquidity continues to shift, the benefits of transitioning new business from Libor becomes even clearer. But it is also imperative we have a clear path for existing or ‘legacy’ Libor contracts to transition in a robust manner. Legislative processes in the US, EU and UK continue to progress in establishing safety nets for those contracts that can’t actively transition ahead of cessation. Strong adherence to the ISDA IBOR fallbacks protocol, in the US and UK in particular, has been encouraging. Clearing houses are also following suit with their own conversion processes on similar terms. We estimate over 97% of sterling interest rate derivatives have a robust safety net in place. [7] But more can and should be done – the protocol remains open for entities that have not yet adhered and it is critical that equally robust fallback arrangements are adopted in cash products too.

Page 7  Table 1: Changes in Global R* from structural and empirical models Structural model  Baseline Range  1985–2015  -1.9  (-3.3, -1.1)  Productivity growth -0.9  (-1.2, -0.3)  Population growth  -0.1  (-0.5, -0.0)  Longevity  -1.0  (-1.8, -0.8)  Empirical model  Median  5%–95%  1985–2015  -1.9  (-2.4, -1.3)  Of which:  Note: For the structural model, the table reports the estimate of Global R* in the baseline simulation, together with the minimum and maximum across the sensitivity tests. For the empirical model, the table reports the median estimates of Global R* together with the 95 percent posterior intervals. Source: Cesa-Bianchi et al. (2022). Table 1 shows that, in the structural model, Global R* falls markedly between 1985 and 2015. The total decline of 1.9 percentage points is driven by the response to the five global trends mentioned earlier. [9] The baseline structural model simulation matches the median change over the same period from the statistical model in the earlier chart (reported in the last row of the table), though both are subject to a wide range of uncertainty. [10] With respect to the main drivers of this decline, two factors – population ageing and a slowdown in productivity growth – play the largest roles in explaining the dynamics of Global R*. The productivity growth slowdown across advanced economies has been discussed extensively in existing work.
On this note, and continuing the good work of the FMC, I would like to announce the third series of initiatives which will be effective immediately. The first initiative will be to extend the short-selling framework to Malaysian Government Investment Issue (MGII) by both conventional and Islamic banks. This will increase liquidity and boost trading activities for MGII in the secondary market as well as tighten the pricing gaps and yield differences between Malaysian Government Securities (MGS) and MGII. Islamic banks may execute the short-selling transactions based on bilateral binding promise (“muwa`adah mulzimah”) concept; The second initiative is to expand the eligible collateral for liquidity operations with BNM to include Bankers Acceptances (BAs) and Negotiable Instruments of Deposits (NIDs) issued by AAA-rated onshore licensed banks. Banks will now be able to obtain liquidity under BNM’s Standing Facilities by pledging these money market instruments. The expansion of eligible collateral is expected to provide an impetus to the trading activities of NIDs and BAs and improve pricing. This is in line with BNM’s expectations for interbank players to take on a greater role in intermediating and pricing of liquidity. The third initiative is the introduction of Bank Negara Interbank Bills (BNIBs) in ringgit and foreign currency. This interbank instrument will be available to onshore banks to better manage their ringgit and foreign currency liquidity and interest rate exposures and hence the capacity to provide competitive pricing on FX for all tenors.

In Chart 7, the greater the number of years spent in school, the darker the green in which the country is colored. In Asia, there are a number of dark green areas, such as Japan, Korea, Malaysia and Sri Lanka. As you would expect, Hong Kong and Singapore also belong to this group, although it is not shown clearly on this map. One may get the impression that Asia as a whole is not as green as North America or Europe, and is more or less similar to South America. This would seem to indicate that there remains significant potential for further accumulation of human capital in the region. At the same time, there are some interesting figures relating to U.S. universities, which are generally acknowledged as providing the highest standard of education, attracting talented people from all over the world. If you look at the data for U.S. university students by their country of origin, you can see that students from Asian countries dominate, as shown in Chart 8. Those students returning to their home countries will no doubt have a profound impact on the human capital there. It is well known that Bangalore, the IT hub of India, benefited from returnees from Silicon Valley. Moretti’s study shows that innovative, highly skilled workers contribute not only directly to the higher quality of human capital, but they also have a positive effect on the skills of those around them – a sort of positive externality.
In this climate of nervousness, the high levels of private-sector debt, the need for balance-sheet write-downs in the financial sector and the difficulty the economy faced in growing at a sufficiently high level all weighed on the perception of the sustainability of our public finances. Moreover, the banking system, which had negotiated the first wave of the international financial crisis without excessive difficulties, came up against bigger problems when the main elements of the underlying macroeconomic crisis began to be felt at banks. Combining with this was the tightening of financing conditions for credit institutions raising funds abroad, as a result of the prevailing instability on financial markets. Faced with all these circumstances, it was vital to firmly show that matters could be turned around and that Spain was not bound to follow the path of instability of other countries. To do this, the change in economic policy stance last spring was essential, since it demonstrated a willingness to react to and redress the imbalances. Given the source of the tensions, the priority was to right the trajectory of public finances. To this end, an ambitious fiscal consolidation plan was approved in May last year. It brought forward the bulk of the adjustment to be made to the years 2010 and 2011. In parallel, there was a patent and pressing need to tackle the labour market shortcomings that were hampering the absorption of unemployment and the adjustment of the economy. Hence a labour market reform was launched.

Fiscal sustainability also needs the economy to swiftly restore its dynamism and to achieve a high potential rate, since this is a fundamental means of financing the public spending increases to which population ageing is inevitably going to lead. The proposed pension  BIS central bankers’ speeches  3  system reform submitted by the government in January this year is also a key step towards curbing these costs. The financial markets have understood that this reform strengthens fiscal sustainability, so it would be advisable to set this proposal down in the form of legislation as soon as possible. Further, the sustainability to which the reform refers should be specified, so that a procedure is in place to ensure at all times that pensions growth is on a sustainable path. On the financial front, further headway in restructuring the banking sector has been made in 2010 and in 2011 to date. The most significant regulatory step here was the creation, in 2009, of the Fund for the Orderly Restructuring of the Banking Sector (FROB). The FROB has proven most useful in paving the way for merger and integration processes in the savings bank sector, which was highly fragmented. As a result, the number of institutions in the sector has fallen relatively quickly from 45 to 18. In those operations that received funds from the FROB, the institutions concerned submitted restructuring plans that envisage reductions in the number of offices and in other operating expenses.
The Taiwan Semiconductor Manufacturing Company, a major producer, said last week that its own production had risen 30% in the first half of 2021, relative to the same period a year earlier, and that it expects full year growth of 60% (in response to what have been much milder price rises I think this counts as relatively “elastic” supply). The Chief Executive of the company said “we expect the shortage to be greatly reduced for TSMC customers starting this quarter”.10  One would expect this to take some of the heat out of semiconductor prices, and those of the goods that rely on them. As for shipping, which has affected the time and cost required for all international goods trade, expectations of future prices, as indicated by forward contracts (Chart 15), imply material declines over the next year or so. See, for example Winkelried (2021), ‘Unit roots in real primary commodity prices? A meta-analysis of the Grilli and Yang data set’. Journal of Commodity Markets, article in press. 10 See “TSMC signals global chip crunch may be easing”, Financial Times, 15 July 2021. 9  12  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  12  Chart 15: Forward contracts suggest material declines in shipping costs  Sources: Baltic Exchange and Bank calculations. Panamax is a sub-index covering mid-sized vessels travelling on 5 of the 23 shipping routes of the full index. It co-moves quite closely with the overall Baltic Exchange Dry Index.

Chart 8 plots wholesale price indices for oil, metals and agricultural goods. The latter two are aggregate measures. The six-fold rise in the price of US lumber provided one of the more spectacular examples for an individual commodity (Chart 9). Chart 8: Non-oil commodity prices have also risen sharply  Sources: S&P Dow Jones Indices, Bloomberg Finance L.P and Bank calculations. Chart 9: The spike in lumber prices didn’t last long  Sources: CME Group5 and Bank calculations. But there have also been sharp price increases further up the supply chain – one notable example is computer chips. And the overall picture, evident in both surveys and official data, is that manufacturers the world over have been facing significantly higher prices for their inputs than they were not just some months ago but even before the pandemic (Chart 10). In many cases (Chart 11) firms have been unable to get hold of them at all, except with long delays, with knock-on effects on their own delivery times. 5  CME Group market data is used under license as a source of information for certain Bank of England products. CME Group has no other connection to Bank of England products and services and does not sponsor, endorse, recommend or promote any Bank of England products or services. CME Group has no obligation or liability in connection with the Bank of England products and services.
Another important element in our transition towards FIT is improving the skills, capabilities and capacities of our staff as well as the systems and procedures to establish a solid framework for forward-looking monetary policy conduct. A key step towards this advancement was when we partnered with the IMF, 4 years back, to develop a comprehensive, model-based Forecasting and Policy Analysis System (FPAS) to enhance the monetary policy decision making process. Substantial progress has been made in this regard, yielding a marked improvement in the modelling and forecasting capacity of the Central Bank, thereby enhancing the forward-looking monetary policy decision making process. The details of this modelling framework are in the public domain now. Going forward, the Central Bank will focus on devoting resources towards 15  further improving technical capacity and infrastructure, which would help generate timely and reliable model-based projections for macroeconomic analyses. The Central Bank has already planned to launch a number of new surveys and compile an array of new indicators to support monetary policy analysis. We continuously endeavour to improve the existing data collection and compilation efforts. These include several production trends related early warning indicators, upgraded price indices, extension of PMI surveys to sectors that need focused attention, and several digitalisation initiatives. We are also in the process of further expanding the household sector Inflation Expectations Survey (IES) beyond the Colombo District through the Country-Wide Data Collection System (CWDCS) with the intention of improving its coverage and precision.

In the opinion of the SFBC, urgent action was needed to prevent a dramatic worsening of the situation, with potentially very serious consequences for the stability of the entire banking system and for the Swiss economy as a whole. This was the environment in which we, in close collaboration with the SFBC and the Swiss government, prepared the operation that was announced on 16 October last year. It is not necessary here to reiterate the details of a transaction that was copiously commented on by the media and is described in our Annual Report. When planning this operation, we were fully aware of the financial risks inherent in the asset portfolio we were taking over. Yet we were convinced that these risks were adequately compensated for by the conditions under which UBS would participate in any losses and, above all, by the collective benefit derived from the stabilisation of Switzerland’s biggest bank. Our decision was thus based solely on considerations regarding the stability of the financial system. Only in a few years will it be possible to pass definitive judgment on our actions. If, upon completion, the operation proves successful, we might come to wonder whether the support measures were actually necessary. If, by contrast, losses are registered, our conclusion will be that the SNB’s operation helped prevent the worst.
As a small, open economy, Sweden must in principle accept the international real interest rate as a given. Monetary policy is not able to affect the real interest rate to any great extent in the longer run, but it affects inflation and inflation expectations. In recent years, the IMF and other forecasters have revised down their forecasts for GDP on several occasions. If one looks at real interest rates, these began to fall even before the financial crisis and real interest rates have also fallen during periods of higher growth. Opinions differ with regard to the causes of this slowdown. The more pessimistic line talk about secular stagnation, where savings have increased and willingness to invest has declined as a result, for instance, of the composition of the population, of growing income gaps and weak technological innovations. This has in turn pushed down the interest rate level compatible with normal resource utilisation. The other more optimistic line say that remaining effects from the global financial crisis, such as deleveraging and increased political uncertainty, explain the slowdown but that these effects are transitory. 1  1  See Deputy Governor Henry Ohlsson’s speech on 18 March 2016 “Decision today, consequences far into the future”, for a longer review. BIS central bankers’ speeches  1  Lower real interest rates and inflation But it is not merely real interest rates that have fallen. In recent years, inflation has also shown a downward trend.

In an acute crisis situation, the availability of sufficient liquidity, together with a strong equity position, is absolutely crucial. Fourth and finally, I would like to mention that, in the Swiss franc money market, repo business via the Swiss Value Chain has proved to be a crisis-resistant source of liquidity, thanks to the consistent minimisation of risks. The repo market allows participants to undertake rapid refinancing in the interbank market, independent of credit limits, thereby making a major contribution to the stability of the financial system. That is why it is important for the SNB that all Swiss and foreign banks operating in the Swiss franc money market join the Swiss repo system. BIS Review 150/2007  3  4  BIS Review 150/2007  BIS Review 150/2007  5
As can be seen in the minutes of the Executive Board meeting on 7 February 2002, I entered a reservation against the decision to leave the interest rate unchanged. I would rather have seen an increase in the interest rate of 0.25 percentage points, which is not any severe tightening of policy, but should rather be seen as not stepping so hard on the gas. 6  BIS Review 13/2002

The influence of monetary policy in the short and long run – research At the end of the 1950s the economist A. W. Phillips found a negative relationship between unemployment and inflation by studying data from the UK for the period 1861-1957 1 , a relationship that is usually referred to as the Phillips curve. This shows that higher employment can be achieved at the cost of higher inflation. It was thus long believed that one could "buy” long-term lower unemployment by pushing up inflation. However this relationship was empirically proved not to hold in the long run. In the 1970s, for instance, there were periods with both high unemployment and high inflation, what is known as stagflation. The relationship was also tackled from a theoretical angle. In a famous article from the late 1960s Milton Friedman discussed what monetary policy can and cannot achieve. 2 His view was that in the long run monetary policy is unable to affect real economic variables such as unemployment and GDP. However, it can affect nominal variables such as the exchange rate and price level. In the long run there is a "natural” level of unemployment that is dependent on the functioning of the labour market. If monetary policy tries to push down unemployment below this "natural" level, it will only result in higher inflation. Monetary policy therefore risks becoming a disturbing factor in the economy.