samchain/econo-pairs-v1 huggingface dataset:
The dispersion of services sector productivity is more than 50% higher in the UK than in other advanced economies (Chart 20a). It has also widened by materially more in the UK. Even in a world of long and lengthening tails of low-productivity companies, the UK is a striking outlier. One potential explanation for this longer tail of UK companies than elsewhere is poor management practices. Using the database developed by Bloom and Van Reenen (2007), we can plot a normalised distribution of management skills for a subset of UK firms. 51  This suggests (a lack of) management quality is a plausible  candidate explanation for the UK’s long tail of companies, as Bloom and Van Reenen find (Chart 21). Looked at quantitatively, there is a statistically significant link between the quality of firms’ management processes and practices and their productivity. And the effect is large. A one standard deviation improvement in the quality of management raises productivity by, on average, around 10%. This suggests potentially high returns to policies which improve the quality of management within companies. Decomposing the Distribution  We can go further in uncovering some of the characteristics of the companies in the upper and lower tails. Might they simply reflect sharp regional differences in productivity, with frontier companies clustered in some regions and laggards in others? Might it simply reflect some sectors, such as manufacturing, generating higher levels of productivity and sitting in the frontier while others, such as services, occupy the lower tail?

We do not conduct large-scale investigations that we document and leave behind us; we describe our own experiences and allow our colleagues to consider whether these experiences may be of any use in their own work. We in Sweden and at the Riksbank have achieved quite a lot that has turned out well over the years, but we have also done a lot that we feel with hindsight could have been done better. For instance, we are proud of how we came through the bank crisis at the beginning of the 1990s, but not of how we got into it. This is the type of experience that no textbooks or courses can convey in the same way as people who were there when it actually happened. Our colleagues are usually interested in everything, but particularly in learning from others’ mistakes. We also consider it important that the Riksbank’s employees learn from the cooperation – that is one of the ideas behind a “Staff Exchange Programme”. Encountering activities that are similar to your own workplace’s, but are conducted under different external conditions always gives reason for consideration and reflection. Our programmes are therefore of great professional interest to our employees and most of them return from their trips with new and often unexpected experiences. Our cooperation with Sida has been excellent, although we sometimes hear that we have not spent as much money as expected. A few experts and their trips do not cost very much. The cooperation with the embassies is also very important.
2  BIS Review 130/2010  models, 3 principal component methods 4 or models where one estimates a flexible-price output gap. 5 Resource utilisation can also be measured by the employment rate, unemployment and other measures. I will return to a number of these measures later. What has happened to GDP in connection with the crisis? During the years prior to the financial crisis, productivity growth in Sweden was rapid. At earlier conferences here in Saltsjöbaden, I have pointed to possible causes of the rapid growth in productivity. 6 Examples of structural causes are deregulation of product markets, increased competition through globalisation, increased use of information technology or – the theme of this year’s conference – a rising level of education and a changed work structure. However, productivity also varies over the business cycle. In June 2007 – before the financial crisis began – our assessment was that productivity growth would be lower in the coming years. But we did not foresee that productivity would fall as heavily as it did. In June 2007, we were assuming that productivity would increase by a total of around 5 per cent during the years 2008 and 2009. Instead, it fell by around 5 per cent. The main reason for this fall was an exceptionally steep decline in demand. GDP fell by a total of 5.5 per cent during the years 2008 and 2009, instead of increasing by an almost equivalent percentage, as predicted.

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Once the phase of theoretical debate and standards drafting had been completed, the Committee’s activities, in particular through its Accord Implementation Group (AIG), focused on implementing the Framework. The time has therefore come to confront this practical reality, with all its difficulties and problems, through a dialogue with the industry and the global supervisory community. This is a major task, given that the aim is to strengthen banking systems and the international financial system, rendering them more robust, more stable, and thus more capable of contributing effectively to the growth and stability of our economies. Despite the importance of Basel II, the proposed agenda also shows us that this is not the only topic currently of interest to the supervisory community. Tomorrow, we will be discussing one of the Committee’s key projects, which, I am convinced, affects all these supervisors gathered here today. I am referring to the Basel Core Principles. With these introductory words, I would like to provide a general overview of the Committee’s work in these areas. First, I will focus on the revision of the Basel Core Principles, before moving on to talk about the implementation of the revised Framework. I will be referring to the necessary collaboration and coordination between supervisors, and will briefly touch on the other implementation-specific issues that the AIG is currently working on. Revision of the Basel Core Principles Looking at recent press headlines, one could easily conclude that the Committee’s activities over the last few years have been almost exclusively focused on Basel II.

This reflects the Board’s purpose of enhancing transparency in the conduct of monetary policy and provide guidance to the markets and the community on its possible future evolution. Summing up, we continue to assume that capacity gaps have been decreasing in recent quarters and will continue to do so in the next two years. In these circumstances, for inflation to converge to the target in the policy horizon, it is necessary that the monetary stimulus continue to be gradually withdrawn in the coming months. With this, we reaffirm our commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the two-year horizon. 5  A new supplement to the Monetary Policy Report: The labor market The labor market plays a central role in the functioning of the economy, and is particularly important for monetary policy. In the short term, the way this market responds to shocks and adjusts employment and wages, is key in the behavior of variables such as activity, consumption and prices. In the long term, the labor market plays a crucial role in trend growth, because of both the evolution of the labor factor and its contribution to productivity growth. Accordingly, the analytical framework of monetary policy has always paid special attention to the twists and turns of the labor market.
15  This is the simple economics behind the Wage Philips Curve. Phillips (1958). For a modern interpretation see Gali (2011). 16  These effects likely dragged on pay growth by around 1 percentage point last autumn. The implications of this for inflation are limited: because these workers also have lower average productivity, the net effect on firms’ unit costs is likely to be broadly neutral. BIS central bankers’ speeches  13  A final possibility is that the moderation in wage growth reflects the low headline inflation rate. With widespread recognition that there is literally no inflation at present, bargaining over real pay is more straightforward. Indeed, there is some anecdotal evidence from the Bank’s Agents that slower increases in households’ living costs have been a significant driver of lower pay awards. A simple estimated Wage Phillips Curve suggests a similar conclusion.17 If this is occurring, this will slow the build-up of cost pressures. The MPC must remain vigilant for signs that low inflation is having second-round effects in the wage bargain, possibly via inflation expectations. The mechanical return to higher rates of inflation as past falls in energy prices begin to drop from the annual comparison should in time reverse this effect and support wage gains. More fundamentally, falling joblessness and a high ratio of vacancies to unemployment should support wage growth. At a minimum, such dynamics suggest the need to continue to eliminate slack smartly. Of course, what matters for inflation is not wage growth in isolation, but pay relative to productivity.

Thank you for your attention. BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13
It was a relatively easy decision to make for the Governing Board in that inflation prospects over the entire three-year forecasting period have improved. Consequently, an interest rate hike became less critical, and there was greater leeway to support economic recovery with an expansionary monetary policy. As soon as the recovery process is again under way, the National Bank will continue the normalisation of monetary policy. This is the only way of ensuring price stability in the medium term and preventing the economy from overheating. BIS Review 19/2005  1

This dynamic process, which started in 2001 and has reached a certain point today – though it still has a long way to go – is the process that will reveal the potential of our economy and determine its place in the world. Since that time only five years have passed. This is a short span of time for an economy that needs structural changes and whose policies are formulated towards to this end, in order to implement reforms, achieve results and ensure the sustainability of such results. Yet, the achievements attained in macroeconomic aggregates have been even beyond the program forecasts. CPI inflation declined to single digit figures after 35 years, from 68.5 percent as of end-2001. While inflation was in decline, high growth rates were achieved. Annual growth in GNP, which was realized as 3.9 percent on average between 1970 - 2001, became 7.8 percent between 2002 - 2005. The ratio of public net debt stock to GNP, which had led to concerns about the sustainability of public debt, decreased to 55.8 percent as of 2005, from 90.5 percent. With the contribution of all these favorable developments in economic aggregates, the Turkish economy has continued to integrate with the world and Turkey’s foreign trade volume has expanded by nearly 170 percent since 2001, reaching USD 196 billion on an annual basis, by April 2006. The main factors that lie behind this rapid change that is clearly observed in the macroeconomic aggregates are; confidence, stability and the enhancement of predictability.
We at the New York Fed will continue to search for new facts to put on the table and push the debate forward. Charts  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11

And even after the crisis has peaked, banks still face the problem of recapitalization. During these times, the process of intermediation suffers. The existence of a deep and liquid bond market allows financial institutions to prepare themselves better for risk management. The authority can require the banks to maintain a higher liquidity ratio, comprising both government and top-rated corporate bonds. The banks can then resolve their liquidity problem on their own by selling these bonds, regardless of their credit standings, which tend to suffer during a crisis. In Thailand, the lack of a liquid bond market meant that the only way to obtain liquidity under pressure was for the banks to come to the Bank of Thailand using their entire loan portfolio as collateral. And as the crisis deepens, these loans were deteriorating day by day. Another benefit of the bond market is that it can attract foreign investments. Foreigners can bring in funds to invest in high quality papers denominated in Thai baht. They are the ones to absorb foreign exchange risk. Without a bond market, Thai companies have no choice but to borrow abroad and bear the foreign exchange risk, themselves. Experience has shown that they have yet to fully develop their skills in doing so. It is our intention, therefore, to expedite the promotion and development of the domestic bond market. The process is very time-consuming, but they are worthwhile for they provide the foundation for a strong and diversified financial market that would be more resilient to future shocks.
Central Banks have found that venturing into the digital transformation with an increasing use of big data, a process that was accelerated because of the sanitary crisis, helps ease somewhat these trade-offs. Many central banks have broadened the analysis using less traditional sources derived from the so-called "open" data available on the Internet. They started to apply big data techniques, such as web scraping, machine learning or text analysis, for collecting and transforming data on prices, job vacancies or retail sales, among others. As a result, it became possible to release new indicators with higher frequency and timeliness. This has contributed to a better understanding of economic phenomena, providing up to date empirical support to the implementation of monetary policy and financial stability mandates. 1  New sources of information In our case, at the Central Bank of Chile we have embarked in several efforts to expand and improve the data available. For the first time, starting in June, we released regional gross domestic product and household consumption on a quarterly basis, with a lag of a few months. This advance enhances data robustness and provides valuable information for economic analysis and public policy decisions by increasing the frequency and opportunity with which we can measure regional economic conditions, which until recently was available only annually.

4  BIS Review 71/2004  In fact, recent work by Bank staff has shown that, even when preliminary ONS estimates are available, combining these with the information from the business surveys can provide a more accurate assessment than if we were to throw the business survey information away and rely solely on the ONS data. This type of analysis is influencing our judgement at the moment. The ONS’s preliminary estimate of GDP growth in the third quarter was just 0.4%, suggesting a marked slowdown in growth driven by a sharp contraction in industrial output. But business surveys suggest that manufacturing output continues to expand. Taking these two pieces of information together, the MPC judges that overall growth was a little higher in Q3 than the official data currently indicate. We talk to people A third way of reducing the risk of error is to talk to people on the ground. If the hard data are at odds with what they are telling us, that will give us pause for thought - about the likely economic outlook, or at least the risks around our central view. Back in the early 90s a familiar charge against the Treasury (which at that time had primary responsibility for setting interest rates) was that they were out of touch - stuck in London, they missed early signs of the recession. The Bank has been careful to avoid this trap. It has built up a network of agencies to act as its eyes and ears around the country.
As in previous months, annual growth in M3 was mainly supported by its most liquid components, with the narrow monetary aggregate M1 expanding at an annual rate of 9.1% in May, after 9.7% in April. Loan dynamics followed the path of gradual recovery observed since the beginning of 2014. The annual rate of change of loans to non-financial corporations (adjusted for loan sales and securitisation) increased to 1.4% in May 2016, compared with 1.2% in April. Developments in loans to enterprises continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non-financial sector balance sheets. The annual growth rate of loans to households (adjusted for loan sales and securitisation) remained broadly stable at 1.6% in May, after 1.5% in April. The euro area bank lending survey for the second quarter of 2016 indicates further improvements in loan supply conditions for loans to enterprises and households and a continued increase in loan demand across all loan categories. Furthermore, banks continued to report that the targeted longer-term refinancing operations had contributed to more favourable terms and conditions on loans. The monetary policy measures in place since June 2014 have significantly improved borrowing conditions for firms and households, as well as credit flows across the euro area. The comprehensive package of new monetary policy measures adopted in March this year underpins the ongoing upturn in loan growth, thereby supporting the recovery of the real economy.

In an environment of accommodative monetary policy, the swift and effective implementation of structural reforms, in line with the 2016 countryspecific recommendations recently approved by the European Council, will not only lead to higher sustainable economic growth in the euro area but will also make the euro area more 2  BIS central bankers’ speeches  resilient to global shocks. Fiscal policies should also support the economic recovery, while remaining in compliance with the fiscal rules of the European Union. Full and consistent implementation of the Stability and Growth Pact over time and across countries is crucial to maintain confidence in the fiscal framework. At the same time, all countries should strive for a more growth-friendly composition of fiscal policies. We are now at your disposal for questions. BIS central bankers’ speeches  3
There is no correlation either, in the long-term UK data, between long-term bond yields and levels of government debt. That’s not to say that QE has no effect on monetary conditions. At least for a time, and like a reduction in the policy rate, it helps to reduce the real cost of borrowing, for the private as well as the public sector. But it’s important to understand that policy is only one of many influences on those costs. A “model” of bond yields that has them responding only to public-sector debt issuance, with or without purchases by the central bank, performs very poorly in the data. One cannot conclude from a coincidence of higher government borrowing on the one hand and lower interest rates on the other (whether short or longer-term) that monetary policy is doing anything other than what it should do. As I said in the introduction, the acid test is ultimately the behaviour of inflation itself. Anyhow, let’s have a look at some of the numbers, starting with short-term policy changes. Charts 3a and 3b get across clearly the correlation with economic activity under inflation targeting. For the post-crisis period they both make some attempt to include shifts in QE, via a translation into the equivalent change in Bank Rate. The first plots changes in the resulting shadow rate (as developed by De Rezende and Ristiniemi (2020)) against the growth of GDP.

Third, and instead, what matters more – not just for inflation itself but the cost of government debt as well – is the prevailing regime for monetary policy. The two can clearly interact: the monetary regime was abandoned in those wars partly because of the pressures from higher spending, and it was that de-linking from gold that allowed prices to rise in the first place. Equally, it was precisely because of the visibility and prominence of that measure, and the belief that it was likely to be temporary, that both the subsequent inflation and the rise in the cost of new government borrowing were contained to the degree they were. Conclusion Aggressive monetary easing by central banks, occurring as it has alongside very large government deficits, has raised fears in some quarters about “monetary finance”. These are misplaced. Certainly there’s nothing about the coincidence of the two in time that, in and of itself, constitutes monetary finance. If the rise in government debt is caused by a weak economy, something that would otherwise depress inflation, easing policy is exactly what an independent, inflation-targeting monetary authority should be doing. Theory tells you that, to stabilise inflation, policy needs to lean against swings in demand and UK history bears that out. It’s true that, if only for a while, easier money policy reduces the real cost of borrowing, for public and private sectors alike. That’s how it’s meant to work. The reduction in the cost of borrowing for the private sector stimulates demand and inflation.