samchain/econo-pairs-v1 huggingface dataset:
A one standard deviation rise in a country’s “economic complexity” has been found to increase its long-term growth rate by a remarkable 1.6% per year. If these numbers are even roughly right, this product atlas is a fantastic navigation device. It could help guide countries towards investing in their most profitable industries. Because it also shows how closely product types are linked, both within and across countries, product and country complexity maps might also be used to help chart a course for industrial policy and international trade. The web is a higher-dimension network than the global supply chain. Navigating it is more complex still. Early in its life, that seemed likely to retard its progress. In the early 1990s, web  16  Chandran (2003). 17  Hausmann et al (2011). 6  BIS central bankers’ speeches  search engines relied on the content of each page to determine its relevance. As the web grew, simple keyword search was being overwhelmed by the web’s size and complexity. By the mid-1990s, search engines were lost in navigation. In 1996, two Stanford students, Larry Page and Sergey Brin, devised a solution.18 You are all now familiar with its name. It was called “BackRub”. Page and Brin saw the links between websites, rather than the content within them, as the key to navigating the web. Using that basic intuition, they created a search algorithm which calculated a ranking of the relative importance of every web page in the global network. This ranking is known as PageRank.

Concluding remarks In closing, I would like to return to our decision of 15 January. Discontinuing the minimum exchange rate and reducing interest rates further are monetary policy measures for which there are no better alternatives. As I outlined previously, since the introduction of the minimum exchange rate in September 2011, the international currency relationships have changed fundamentally. In view of this development, a minimum exchange rate of CHF 1.20 per euro was no longer sustainable. Over the long term, adhering to the minimum exchange rate would have jeopardised the SNB’s ability to conduct monetary policy and fulfil its mandate in future. This would have saddled the Swiss economy with longer-term costs that would have been out of all proportion to the benefits of continuing to enforce the minimum exchange rate of CHF 1.20 per euro. With the international low interest rate environment, monetary policy faces big challenges. Overall, the Swiss franc is significantly overvalued. Negative interest helps to make investments in Swiss francs less attractive and thereby correct this overvaluation over time. The SNB will continue to take account of the exchange rate situation, and its impact on inflation and economic developments, in formulating its monetary policy. It will therefore remain active in the foreign exchange market, as necessary, in order to influence monetary conditions. Ladies and gentlemen, thank you for your attention. 4  BIS central bankers’ speeches
The difficulty is that no one knows which batches of meat have been infected. If eating infected meat will cause the individual to become very sick, then the natural reaction is for everyone to immediately stop eating meat altogether. This will continue until the entire meat supply has been recalled and inspected. Subprime mortgage defaults were the E. coli that infected the financial system. Some mortgage assets would lose significant value as a result, but it was difficult to know which mortgage assets were “infected” and who was holding these assets. The natural response was to pull back from these assets. In a deposit run, when the quality of a bank’s assets is brought into question, depositors immediately withdraw their funds from the bank. In the case of the repo market, lenders raised the haircuts required for the repo loans or refused to roll over the repo loans collateralized by subprime mortgage assets. This is equivalent to a partial or a complete withdrawal of funds from the market by the lenders. 13 In addition, the higher haircuts forced the owners of the assets to come up with additional cash which typically meant that they were forced to sell assets. Given that there was little appetite to purchase mortgage-related assets, high-quality assets had to be sold in order to raise this cash. This put downward pressure on the prices of these assets and increased the uncertainty regarding their future values leading to demands for higher haircuts on these assets, as well.

I want to emphasize the word limited. Notwithstanding Adam Smith’s own reference to government intervention, the role of government must remain a limited one. If temporary market imperfections or difficult market adjustment periods give rise to the justification for relentlessly expanding the role of government, there will be a point when markets will no longer function effectively and when welfare creation will seize to advance. There is no better breeding ground for irresponsible behaviour than an environment of economic stagnation or worse, welfare decline. BIS Review 38/2005  1  There are times in history when the world economy undergoes fundamental structural change. With the rapid integration into the global economy of China and India, we are experiencing such historic change. Fundamental structural economic change invariably produces economic victims. The temptation for governments to interfere excessively with the free market is therefore particularly acute during periods when dramatic change occurs. Paradoxically, it is precisely then that the forces of the “invisible hand” are most needed to help bring about the welfare that can ultimately help absorb the negative externalities of change. If I am right that we are currently traversing such a period of historic change, it is more important than ever to ensure that government intervention in markets is limited and remains subject to continuous checks. Free markets under the rule of law, Ladies and Gentlemen, provide the optimal path to welfare creation and ultimately responsible behaviour by market participants.
In the fall and in early winter, the market also felt the weight of rapidly deteriorating global lending terms, which will undeniably support the Central Bank’s tightening measures and will reduce domestic demand and inflationary pressure, as was mentioned in the Board of Governors’ announcement of 14 February. It is possible that there will be a rapid drop in domestic demand as a result of high interest rates and a tightening credit supply. At this point, however, it is impossible to assert that this will be the case. Exactly when it will be possible to lower the policy rate will be determined by economic developments and outlook. Precipitate interest rate reductions would push inflation upward and standards of living downward. The suggestion that it is necessary to lower interest rates in order to control inflation is absurd. Indeed, it is astounding how carelessly many people seem to view inflation. Furthermore, it is appropriate to stress that the Central Bank believes it is impossible to choose between price stability and financial stability. If we were to relax our stance on price  BIS Review 25/2008  1  stability, it would surely undermine the credibility of monetary policy. Inflation – and no less important – inflation expectations would increase drastically, which could lead, in short order, to an upward spiral of prices and wages and falling exchange rate.

In the most recently published inflation assessments, it was assumed that the price stability target was not threatened during the forecast period despite the growth of demand being so strong that use of capacity was under strain at the end of the period. The majority view of the Executive Board was therefore that there was no reason to increase the repo rate. This assessment was based on free resources in the initial situation, good productivity growth, low price increases on certain recently deregulated areas, low import prices and finally low inflation expectations. It is not per se strange that GDP can increase as much as 3-4% for a couple of years without inflation sharply accelerating, if the use of resources is low initially. If the pattern from previous cyclical upswings was to be repeated, price pressure should now increase. However, it has proven difficult to identify any exact and very stable correlation. As I mentioned earlier great changes have taken place in the Swedish economy. While there are still considerable deficiencies in competition in many areas, it is nevertheless not probable that inflation will accelerate strongly in the next few years. An important reason for this is that the price stability target has now  BIS Review 48/2000  4  obtained such strong support that inflation expectations are not increasing despite a cyclical upswing that is stronger than for a very long time.
Confidence in some countries’ ability to service debt has been weakened. The monetary union is under pressure. (Chart 1: Current account) The crisis has its roots in global trade imbalances, with high saving in emerging economies and comparably large deficits in many advanced countries. The imbalances drove down long-term interest rates to very low levels and the appetite for risk grew. Inadequate financial sector regulation led to a further deepening of the imbalances. (Chart 2: Yield on 10-year government bonds) Four years after the financial crisis engulfed the world, a European version has now emerged. Both market participants and the authorities failed in their assessments after the introduction of a single currency. Prior to the introduction of the Economic and Monetary Union, there were wide differences between interest rates facing different European countries, which primarily reflected different inflation expectations across countries. But through the 1990s, long-term interest rates drifted down to German levels. Over the next 10 years, sovereign interest rates were fairly similar – and very low – for all euro area countries despite wide differences in debt levels, budget deficits and growth rates. Market participants did not take into account differences in sovereign creditworthiness. Sovereign debt was treated as virtually risk-free, both in the markets and by the authorities. The period contrasts with the recent two to three years during which interest rates on sovereign debt have widened sharply. For many countries, interest rates have reached very high levels.

But in a country such as France, which already enjoys a high productivity level, there is still plenty of room for progress in the diffusion of ICTs, both in terms of the speed and quantity [slide]. The share of ICT capital stock in GDP is markedly lower in France than in the United States and the United Kingdom. Getting rid of this lag would deliver substantial gains in growth for France. 1. Third hypothesis, a dearth of investment? Catching up to the technological frontier will require investment in ICTs as well as in research and development. This investment is vital in order to incorporate innovation into production processes. Yet it is also a lot riskier than other types of investment, for example in construction. Indeed, it notably combines a low or non-existent resale value with uncertain future revenue flows. Like the rest of the innovation economy, therefore, it needs an appropriate form of financing – one that relies more on equity as opposed to debt. However, the cost of capital remains high despite the sharp drop in interest rates over the past 20 years. According to Banque de France calculations, the nominal cost of capital for France’s major listed companies is still between 8% and 9%, whereas the risk-free rate is currently around 0%. This particularly high cost places a drag on investment, and hence on innovation and productivity growth. 1. Are there any factors that are specific to France?
Nevertheless, there is a significant risk that the credit supply to Swedish companies and households could worsen considerably if the problems on the credit markets take hold and persist. Not only would the effects of such a credit squeeze be unfortunate for companies and households – they would harm the entire economy. It is in part against the background of this risk that we should view the Riksbank's liquidity support measures over the past few weeks. It is also one of the reasons for The Riksbank's most recent decision to cut the repo rate by 0.5 percentage points. Role of Swedish authorities One of the main duties of the Riksbank is to promote a safe and efficient payment system. More specifically, this means that the Riksbank continually analyses risks and threats to the stability of the Swedish financial system. The purpose of the analysis is to discover any changes and vulnerabilities that could lead to a serious crisis. In the event that a crisis should occur, certain tools are at our disposal to handle the situation. Over the past few weeks you  BIS Review 125/2008  3  have seen several examples of how we can assist the banking system in various ways with liquidity-supporting measures when the situation so requires. The Riksbank is not the only authority that is responsible for ensuring financial stability. Finansinspektionen also plays an important role as a regulatory authority.

To enable the banks to restore the situation to more normal conditions, the Riksbank has offered financing at longer terms than what the markets can currently provide by lending Swedish krona with maturities of three and six months. The lending is designed so that we provide liquidity in the form of somewhat longer loans and absorb the same quantity of short term liquidity. Combined with the fact that lending takes place at market rates, this means that banks receive help with their strained financing situation at the same time that the measures do not have any direct effects on monetary policy. This is a very important point. The Riksbank is quite simply helping the banks replace their short-term financing with longer-term financing. In a broader sense, the Riksbank is assuming the role of market maker in the money market and by doing so ensuring its functioning. The other problem is that a general shortage of financing opportunities in US dollars has arisen. Since the Swedish banks are not counterparties with the US central bank, they cannot be certain that they will receive any of the injections of liquidity that the Federal Reserve makes. That is why the Riksbank have offered their counterparties large loans in US dollars.
The University at Albany clearly plays this role in the capital area. Perhaps equally important in terms of promoting local economic growth, colleges and universities can play a key role in creating jobs for skilled workers in local businesses. Colleges and universities conduct research and development that can have “spillover effects” into the local economy. Businesses in the region can take advantage of being close to these innovative activities and facilities to develop new products and technologies. This can also help draw new companies to the region to access university resources. Thus, successful industry–higher education partnerships can provide a quite a boost for a region’s economy. The local nanotech sector provides an excellent example of this type of partnership at work. During my visit to the University’s College of Nanoscale Science and Engineering this afternoon I look forward to seeing the facilities and hearing more about the Center’s plans to lead the way in global nanotech research. More broadly, I understand that our audience today includes several members of the Regional Economic Advisory Council – including the University at Albany’s president, George Philip and Michael Castellana, the co-chair of the Council – who are working to advance such partnerships and the outlook for the region. Going forward, the industry–higher education partnerships taking place here will be increasingly important. I expect the strong foundation already in place will help maintain the economic vitality of the capital region.

Conclusion To sum up, growth has picked up modestly in the second half of 2011, but not enough to bring unemployment down. While there are some bright spots in the U.S. economy and the financial system, strong headwinds are preventing a more vigorous recovery. Inflation, which has risen in recent months, is poised to moderate soon. The Fed is doing – and will continue to do – everything within its power to promote jobs and price stability. Looking ahead, the key challenge for the Albany area will be to continue to prepare its residents for the best jobs being created here. Expanding education and skills will go a long way to broaden participation in the economy to all residents. Thank you for your kind attention. 4  See Jaison Abel and Richard Deitz, The Role of Colleges and Universities in Building Local Human Capital. Current Issues in Economics and Finance, vol. 17, No 6, 2011. 6  BIS central bankers’ speeches
Otherwise, the banking sector’s capacity to intermediate more effectively would be impaired for a longer time. Banks need to be determined to follow collateral execution procedures for insolvent borrowers. On the other hand, court decisions and particularly the actions of bailiff officers should be prompt and effective. I take this opportunity to appeal to the authorities to prioritize these actions. If legal procedures need to be complemented and improved further in order to enhance efficiency, the banking industry should make the necessary proposals in a prompt fashion and the public authorities should commit to considering them. Lastly, I want to elaborate on two other issues. The first relates to governance and accountability in banking operations and the second to the improvement of capacities for the identification, evaluation and management of risks. These two issues have continuously been part of our regular communication as they rest on the cornerstone of a safe and successful banking activity, public confidence on which remains unwavering. Concerning governance, last year I constantly highlighted the need for professionalism, commitment, responsibility, farsightedness and accountability to be reflected not only by you but they should also be embodied in your staff. To make this happen, policies and rules for defining strategies for the development, concrete decision-making, control of particular activities and their reporting to the institution and the public need to be continuously completed and improved. Internal control systems are the ones to determine the institution’s capacity to operate safely.

Lars Heikensten: EMU - cohesion or diversity? Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riskbank, to The Swedish Institute of International Affairs, Stockholm, on 10 November 2000. *  *  *  First a word of thanks for inviting me to speak. I greatly appreciate the opportunity of talking about matters to do with European integration to an audience outside the circles in which I normally move. This is all the more stimulating given that there is little more than a month to go before Sweden takes over the presidency of the EU Council of Ministers. I intend to begin by saying something about the history and principles behind the European Monetary Union and how they can be related to our theme today: cohesion or diversity. Although EMU was fully launched so recently, I must then comment on what has happened to date, as regards economic developments as well as the economic policy cooperation. I shall then briefly conclude with my view of the future for EU’s economic policy cooperation. Political as well as economic grounds for a monetary union Let us bear in mind that none of the things we are discussing today are entirely new. Common currencies were in use more than a century ago and some of them were valid throughout the continent of Europe. A joint standard and a rapidly growing economic exchange were already seen as natural goals around the turn of the 19th century.
An investment boom preceded each panic – the earlier in copper and the later in housing – with much of the credit being funded by sources outside of any existing liquidity protections. When the bubbles began to deflate and prices began to fall, loan defaults quickly developed precipitating funding runs on the institutions involved in extending this credit. What seemed like large liquidity buffers by individual firms were quickly drawn down. Funding withdrawals precipitated asset sales, which put further downward pressure on asset prices. The resulting credit contractions adversely affected the real economy, setting up an adverse feedback loop that exacerbated the initial losses. 2  2  Walter Bagehot, 1873. Lombard Street. London: Henry S. King and Co.  BIS Review 92/2010  Given the parallels between the events of 1907 and 2007 and, more importantly, the similarities of the lessons learned from those episodes, I believe the most instructive name for our latest financial crisis is the “Panic of 2007”. In the rest of my remarks, I will explore in greater detail the factors behind the panic, as well as the responses by the Federal Reserve. The first question to explore is the extent to which the financial system had evolved over the past several decades. 3 Over this period, demand deposits lost their market share to money market mutual funds, which, while considered safe, are not guaranteed like deposits. This made it increasingly difficult and less profitable for banks to fund loans on their balance sheets using deposits.

Nout Wellink, President of the Basel Committee on Banking Supervision and Governor of the Central Bank of the Netherlands, quotes Charles Kindleberger, saying in his famous book "Manias, Panics and Crashes", that the "financial crises are typically a result of extended accumulation of imbalances preceded by certain exogenous shock, or structural changes in the financial system. The examples are in the changes in the political environment, new regulations and financial innovations. These changes create new possibilities, but also, uncertainties and lack of awareness of potential risks from the so-called unknown-unknowns". In such environment, says Wellink, "the traditional checks and balances can become inappropriate and can easily result in excessive risk". Really, we have faced:  2. 4  •  Fiscal and balance of payments deficits, which failed to be treated because there was no enough good will for that in the globalized world, and accordingly to discuss about the foreign exchange rates. •  Huge imbalances in the financial sector, the dimensions of which grew to explosion. While the savings rates were decreasing with a limited rise in the households' deposits being registered, the banks were filling in the gap between the retail deposits and the credit growth by using sources from the wholesale markets. For example, in England, the gap between the lending to clients and the deposits climbed from zero, in the beginning of the century, to over British Pounds 700 billion in the first half of 2008, says Sir John Gieve, Deputy Governor of the Bank of England.