samchain/econo-pairs-v1 huggingface dataset:
On the other hand, the postpandemic recovery in aggregate demand has been much stronger in the US, with a much tighter labour market. At the opposite end of the spectrum is what I would call the “academist approach” – although it comes from Lars Svensson, a one-time practitioner who was, among others, Deputy Governor of the Swedish Riksbank between 2007 and 2013. It would be to look purely forward and do inflation forecast targeting. The central bank then works out an interest rate path that is compatible with bringing inflation back to the target over the forecast horizon (and staying there). Simple models, such as the original Svensson’s one (1997)ii, can be inverted to find a single policy interest rate – “the target-compatible rate”. With more complex models, target-compatible paths can be found through interest rate scenarios. This approach is appealing in theory but raises several practical problems. First, it relies heavily on having a very accurate model and clear identification of the shocks hitting the economy, including how persistent these will be. The substantial forecast revisions over recent quarters underline quite how difficult it is to calibrate policy based on forecast targeting. A second, and more subtle, problem is the “stationarity” of most macroeconomic models. This is either true by assumption in standard New-Keynesian models or implicit in empirical forecasting models. For either reason, forecast inflation has a tendency to revert to the target or the historical mean under almost any scenario.

In this slide I plot a measure with fewer technical assumptions: it uses the nominal OIS curve and ILS swaps to create forward one-year real rates at horizons of 4 to 9 years; this can tell us where markets expect real rates to settle once current shocks have dissipated. The solid line shows the first principal component as an estimate of r* using this approach, with a real neutral rate now just below zero. Based on a target 6  Page 7 sur 14  inflation rate of 2%, the nominal neutral rate should then be a bit less than 2%. Given the fact inflation is far above target and still rising, we should reach this level before the end of the year. It is much more important to give the public this landmark than to spark speculation and public betting game on the size of the next move in October: this is why I won’t say anything today about this 50/75 bp discussion, which is premature especially in the current volatile market environment and the additional tightening of financial conditions. 2.2 A four-pronged approach for further interest rates decisions What will happen from that point onwards? We probably won’t stop raising rates there, but we will enter another part of the journey: a more flexible, and possibly slower one, relying on a meeting-by-meeting precise economic assessment.
Such an outcome may not be what we expect to happen or what is likely to happen but rather the worst possible case. The risk has not been generated by the financial sector. But, if it occurred, it would almost certainly lead to a correction in UK asset prices and losses for UK banks. The task of the FPC has been to ensure that such a correction, were it to occur, would not lead to a UK financial crisis. We have tested the banking system to equal and greater stresses to give us the confidence that while losses would occur, unlike 10 years ago, the system would have the capital to absorb them. We have required the banks to hold liquidity, in the currencies that they would need, to withstand a liquidity stress greater than that experienced in the financial crisis. And the Bank stands ready to provide liquidity in all major currencies. And, with other UK authorities, we have ensured that regardless of the Brexit outcome there should not be disruption to the provision of financial services in the UK by EU firms. The Financial Stability Reports of the FPC over the past 18 months have set out the actions that have been taken. The Record of the Financial Policy Committee’s February meeting, published earlier this week, makes clear the Committee’s assessment that the core of the UK financial system is resilient to, and prepared for, the wide range of risks it could face, including a worst case disorderly Brexit.

No, it applies of course to all parts of our activities – everything from our way of making forecasts to how the organisation looks and how we can improve the opportunities to assess how well we are doing. And an important part of this is discussions like the one we are having today. Thank you! 1. Driving forces behind increased openness and clarity   Monetary policy works better  Efficiency reasons  Independence requires openness  Democratic reasons  8  BIS Review 132/2007  2. Increased credibility 5  5 Inflation expectations CPI  4  4  3  3  2  2  1  1  0  0  -1  -1  -2 1994  -2 1996  1998  2000  2002  2004  2006  2008  2010  2012  Sources: Prospera Research AB and Statistics  3. Changes in our communication 2007 February  M ay  September  BIS Review 132/2007  • Forecast for the repo rate • M onetary Policy Report  • Press conference after each monetary policy meeting • No signalling in normal cases • Names in the minutes of the monetary policy meetings  • Repo rate forecast at each monetary policy meeting • 6 times a year  9  4. Other changes…   Time lag between the Monetary  Policy Report and the hearing  UND1X has become CPIX  5. Swedish economy is strong GDP growth. Annual percentage change.
The amendments made in the Law of the Central Bank of Turkey in 2001 have been a turning point and instrumental for the efforts to maintain macroeconomic stability. With these amendments, achieving and maintaining price stability is stated as the primary objective of the Central Bank and the Bank acquired its instrumental independence. In fact, the independency has given the Bank the opportunity to set its policies for longer terms, free of political cycles and pressures. As an assurance given to the public to ensure the long term price stability objective, the independence of the Central Bank of Turkey together with its transparent and effective communication policy have increased the credibility of the monetary policy. Besides, the new monetary policy framework implemented first as implicit and then as full-fledged inflation targeting regime together with the floating exchange rate regime have contributed a lot to the decline in dollarization since 2002, as the literature 10 suggests. In this respect, we can observe the findings of the portfolio approach in Turkey very clearly. To be more specific, the volatility of exchange rates has increased due to floating exchange rate regime on the one hand and inflation and its volatility have declined significantly on the other.

Given the fact that the policy rate is an inadequate tool to deal with overleverage, excessive risk taking, or apparent deviations of asset prices from fundamentals, there are other instruments at the policymaker’s disposal: countercyclical regulatory tools. Thus, if leverage appears excessive, regulatory capital ratios can be increased; if liquidity appears too low, regulatory liquidity ratios can be introduced and, if needed, increased; to dampen housing prices, loan-to-value ratios can be decreased; to limit stock price increases, margin requirements can be increased. As I said earlier, the NBR has always had to juggle the “three aspects of stability” and that called for the deployment of alternative instruments, such as the full use of the reserve requirement ratios and recourse to administrative measures. Reserve requirement ratios were increased up to 20 and 40 percent for lei- and forex-denominated liabilities respectively, and the list of administrative measures included: enforcing a maximum loan-to-value ratio, introducing debt service ceilings relative to households’ monthly disposable income, setting limits on banks’ forex exposure vis-à-vis unhedged borrowers, using differentiated coefficients in stress tests (higher for exposures to EUR than lei, with even stricter coefficients for CHF- and USD-denominated credit). Even though at the time our modus operandi was seen as deviating from the orthodoxy of central banking, during the global crisis or in its aftermath, macroprudential instruments are now part of the mainstream and forex interventions re-entered the arsenal of many central banks, including some of those using a free floating regime before the crisis.
Throughout the single market, there will be the same visibility of all prices, thus permitting immediate price comparisons, cost comparisons and therefore fostering competition in all markets. My conclusion on this point is that the single currency will not prevent Europe from embarking on eliminating economic rigidities, inducing market flexibilities and generating measures to cope efficiently and successfully with global competition. On the contrary, the single currency endeavour will help foster the structural reforms that are needed in Europe to improve growth prospects and job creation and counter unemployment. The second and third criticisms are based upon the argument that the Europeans will not set up an optimum currency area like the US because of the absence of a federal government and a federal budget and therefore that there is no possibility of ensuring an appropriate consolidated fiscal policy and ensuring shock absorption through automatic stabilizing transfers. In my eyes, the Maastricht Treaty gives a pertinent response to these pertinent questions. The thrust of the spirit and of the letter of the Treaty is that everything is done to construct the euro area as an optimum currency area. First by ensuring that it incorporates economies that have already proved being convergent in the fiscal field as well as in the monetary and financial fields. This is why the so-called five Maastricht criteria are important.

New conditions have been created not only for households and firms in the euro area and adjacent countries but also for economic policy. Sweden is by no means unaffected by this change, even though we are outside the euro area at the start. Economic development in the euro area is crucial for Sweden’s economy. As a member of the European Union, moreover, we are involved in many of the contexts where policy is formed. We have also undertaken to conduct our policy in accordance with the rules that have been established for the Union. Against this background it is important that we are engaged in the discussion of economic policy in Europe. My purpose today has been to highlight a number of issues of importance for the European debate. I have tried to describe how the ECB works, the rules that have been built up for fiscal policy and so on. I have also said something about events in the past six months and discussed some of the problems as I see them. One thing is certain: the euro’s introduction does not constitute the final step in the integration of Europe. The single currency will raise new questions that will be answered by degrees through the cooperation between the countries of Europe. It is important that Sweden takes an active part in that debate. BIS Review 76/1999  6  7  BIS Review 76/1999
We need more investment in health, in education—especially in the earliest years—in infrastructure, and in training and skills for well-paying jobs. There is so much work that needs to be done to make sure that we are fostering an equitable recovery and ensuring that everyone is able to fulfill their economic potential. That’s why at the New York Fed and across the Federal Reserve System, a key area of focus is to better understand what contributes to economic inequities and to finding solutions.3 Our economic research and analysis, which my colleagues will share shortly, highlights many of these stark disparities.4 In addition, hosting conversations like this one creates dialogue around these issues and builds connections between those working for change. 1/2  BIS central bankers' speeches  Another important role the Federal Reserve plays in promoting economic equity and access is supervising banks with respect to the Community Reinvestment Act. This law requires banks to lend, invest, and offer services to low- and moderate-income communities in areas where the banks operate. To emphasize all of our work in this space, the New York Fed recently published a statement reinforcing our commitment to fostering a more equitable economy and society:5 The New York Fed stands in unity with all those who oppose racism, hate, and violence. We join them in a shared desire to root out the intolerable inequities and injustice grounded in systemic racism that persist in our society.

There are no sharp dividing lines between these horizons. Nonetheless, the time horizon imposes various requirements on economic theory and models for our purposes. The starting-point for the analyses is important. Current statistics and anecdotal information can serve as a basis for providing some indication of how the economy has evolved up to the present. But the information set is uncertain. Statistics are published with a lag and are often revised. Data from different sources can provide different pictures of the situation at hand. Statistical models can provide us with good support and help distinguish between news and noise in the data. They can capture time series properties in data and correlations that in many cases will be able to produce good forecasts of developments in the months ahead. There are certain similarities between projecting developments in the Norwegian economy in the coming months and forecasting the weather. Meteorologists have observed that averaging forecasts from a large number of models generally produces more accurate forecasts. To project consumer price inflation in the coming quarters, the Bank has developed a system for averaging forecasts from about 170 different statistical models, all of which are intended to project inflation in the Norwegian economy in the very near term.3 The model weights are determined on the basis of historical accuracy and are continually adjusted so that models with better predictive power are given greater weight in the  3  The models are grouped into three classes: factor models, indicator models and VAR models.
It is important to intervene upstream in the process well before retrenchments take place. MAS  is working with financial institutions to identify early on jobs that might be at risk in the future. We then work with these financial institutions to proactively up-skill these workers through professional conversion programmes. These are all early efforts still and will take time to bear fruit. On the positive side of the jobs equation, we continue to see good demand for professionals in several areas of finance. These include compliance, risk management, insurance underwriting, and asset and wealth 9 / 10  BIS central bankers' speeches  management. Within the technology area, there continues to be strong demand for expertise in cyber security, data analytics, network architecture, artificial intelligence, and machine learning. MAS is working closely with the industry to build the relevant skills and competencies at all levels within our financial institutions. To ensure graduates are job-ready, we are partnering with institutes of higher learning to develop curriculum in new growth areas, for example risk analytics for insurance. To support mid-career finance professionals deepen their specialist skills so that they stay relevant, we have launched the SkillsFuture Study Awards, with a total of 170 awards to be granted this year. To equip capable Singaporeans to take on regional or global leadership roles in financial institutions, we are co-funding leadership programmes at NUS and SMU focusing on international exposure, Asian market insights, and professional networks.

The Sellers Stamp Duty (SSD) holding period was shortened and the rates lowered because speculative flipping of properties had declined significantly. Mortgage equity withdrawal loans (MWLs) with LTV ratios of 50% or less were excluded from the TDSR framework to give home owners greater flexibility to monetise their properties for retirement needs. - This is for a very small category of people: we estimate that MWLs excluded from the TDSR framework made up just 1% of new private housing loans granted in the last three months. Over the medium-term, property prices should be aligned with broader income trends in the economy. Ultimately, residential property purchases are financed out of buyers’ income. In turn, income growth depends on GDP growth. If property prices increase faster than nominal GDP growth on a sustained basis, buyers would end up taking on more leverage than they can reasonably repay out of their incomes. Such highly-leveraged households will be particularly vulnerable when interest rates rise or their incomes fall. Therefore, market participants – owner-occupiers, investors, developers – need to set realistic expectations regarding future property price increases. MAS, together with MOF and MND, will continue to keep a close watch over developments in the property market. MAS’ FINANCIAL PERFORMANCE After contribution to the Consolidated Fund, MAS made a net profit of $ billion for FY2016/17. This is a record profit but as I have often reminded at these briefings, MAS’ profit and loss outcomes are subject to sharp swings.
Employment in this sector rose by more than 40% in France and Germany. Besides the improvement in the job situation in the euro area, which results from better economic prospects, it should be mentioned that over the past few years the European Union has embarked on determined efforts to promote structural reforms aimed at improving the functioning of labor markets. European countries increased flexibility in the labor market, in particular by developing part-time and temporary contracts. Let me quote some figures to illustrate this point: –  From 1995 to 1999, part-time employment rose from 14% to 17% of total employment in the euro area. This proportion is more important than in the United States, where it amounts to around 13% of total employment. More than half of overall net job creation was due to part-time employment. –  In conjunction with this development, temporary employment in the euro area rose to 15% of total employees in 1999. It is also worth mentioning an emerging trend towards more cross-border mobility of human resources, especially among young people. More and more university degrees include a stay in one or two foreign universities, thus helping to overcome linguistic and cultural barriers in Europe. Last but not least, a key feature which has fostered job creation in the euro area in recent years is wage moderation, together with reductions in the social charges imposed on employers.

This is why they certainly need to be closely monitored, not only within individual firms but also at the level of supervisory bodies. •  At a moment when all activities are tending to accelerate and render location issues more acute, changes in the regulatory environment are crucial to fostering efficient financial markets. Let me mention in particular the UCITS (mutual funds) Directive and the directive on occupational pension funds, which ought to eliminate barriers to investment and, of course, the importance of the directive on take-over bids in the context of the integration of national stock exchanges. More generally, it is very important for the European Union to accelerate reforms in the financial field. In this respect, as I said, key directives have to be laid down and transposed adequately in national laws, whereby the public authorities within FESCO and professionals (like the members of your association) should play a role to facilitate a harmonized set of principles or recommendations. On all these subjects, we can expect a lot of progress in the following months, within the guidelines already issued by the European Commission (in its Financial Services Action Plan). France, for its part, has already expressed its intention to put these matters on the Agenda when it takes over the presidency of the European Union in July. 2.2 Coming now to the process of consolidation in the banking sector, there is no need to recall how banking and financial consolidation has sped up in recent years in Europe.
On the one hand, it is tautological to say that crises are unpredictable, or else  2  It is out of the scope of this presentation to discuss the role of monetary policy in causing the crisis. As I have argued elsewhere (De Gregorio, 2010), the cause of the crisis was mainly financial fragility, while lax monetary policy played only a secondary role. Many countries, such as Chile or Canada, for example, had very expansionary policy before the crisis, and did not suffer a financial collapse. BIS Review 84/2010  3  they would never occur. History is plagued with crises. Moreover, crises have become more frequent in recent decades as compared with the Bretton-Woods period, although their severity and duration have not changed significantly (Bordo et al., 2001). Crises must be avoided, but the only way to make sure they do not happen is to eliminate financial innovation and development altogether, which we know is not a good prescription. Therefore, crises will still occur, and the role of policies is not to be the cause of them, but to increase resilience of financial systems and minimize their cost. 3 Of course, all these elements were absent in the global financial crisis and for this reason we need to devote more thinking to reforms. Although crises will continue to happen, we must not conclude that since crises are unavoidable, there is nothing we can do about them.

Along the same line, the Taylor rule was, obviously, used before John Taylor estimated it. Regardless causality, monetary policy and central banking have changed significantly. The movement toward granting central bank independence around the world has been a positive one. Of course, this comes with the challenge for central bankers to demonstrate that this is really a good thing, something that certainly has been questioned in some countries during the recent crisis. Although central banks were created to address problems in the banking sector, over time, their objectives moved to more general aspects such as economic development or growth. Then, since the 1980s, and with the success of the Great Moderation, central banks increasingly, and rightly so, focused on price stability. Unfortunately, financial stability, another issue at the core of central banking, was overlooked. Monetary policy has abandoned money supply and exchange rates as nominal anchors, to target directly inflation and anchoring nominal variables via inflationary expectations. To reinforce credibility and to gain legitimacy, communication has become central to the conduct of monetary policy. Many challenges remain; in particular how to incorporate the financial stability goal into policy making, but the evolution of policy making has been enormous, in particular for emerging economies. However, progress in economics has not been completely successful, and many challenges remain to make economic analysis more helpful to guide policies, and that is the issue I want to discuss next.