samchain/econo-pairs-v1 huggingface dataset:
Over time, the employment share has fluctuated around a stationary average. The same is true in other countries. •  The effects of technology have been felt, at least to some degree, in hours worked, as Keynes predicted back in the 1930s. In the UK, the average working week has fallen from 50 hours a century ago to around 30 hours today (Chart 11). Nonetheless, this fall-off has fallen well short of Keynes’ prediction of a 15-hour week. The “leisure classes” are no more numerous today than a century ago. •  Shifts in population – through changes in birth/death rates or through immigration – have also had no obvious impact on employment. The relationship between population growth and the employment share is, if anything, positive (Chart 12). This, too, is evidence of the compensation effects of population growth – higher output and demand – outweighing any displacement effects in the jobs market. •  As technology has boosted productivity and incomes, its fruits have been harvested by workers, typically in the form of higher wages. Since 1750, the upwards march of productivity has largely been matched by the upwards march of real wages (Chart 13). Since the Industrial Revolution, the former has risen on average by 1.1% per year, the latter by 0.9% per year. BIS central bankers’ speeches  5  •  The same pattern was evident prior to the Industrial Revolution. Then, the absence of technological progress led to productivity flat-lining. The real incomes of workers similarly flat-lined (Chart 13).

During the course of the SAARC Payments Initiative, member countries will be able to learn from the efforts and experiences of developments of payments within the region, as well as outside. Some of our member countries may have to acquire modern communication infrastructure and advanced payment systems to support the delivery of the payment and settlement services required, not only by their own markets, but also by the regional market. In effect, the SAARC Payments Initiative will be able to: (a) guide the efforts of member countries in modernizing their national payment systems; (b) assist in establishing appropriate technological links with others in the region; and (c) bring their payment systems to appropriate standards compatible with international standards. 4. The importance of payment systems  4.1 The broader term “payment systems” includes not only payments, but also clearing and settlement systems. Payment systems represent a basic infrastructure for the functioning of market economies and in developing more inclusive financial systems, including enhancement of access to finance. The soundness and efficiency of payment systems are fundamental to the stability of the currency, as well as the financial system and, therefore, to sustaining economic development. 4.2 It is in this context that some of the governing laws of the region’s central banks include references to the responsibility of central banks to promote the monetary, financial and payment systems in their respective countries.
Further, the effect on forward rates is accounted for by changes in the real forward rate; there is no significant effect on forward inflation rates. At the ten-year point, the effect on the forward real rate is statistically significant with a 100bps increase in the short-rate increasing the 10-year forward rate by around 7 bps (Chart 1). To put that into context, Bank Rate has been cut by around 5pp since 2007. Taking these results at face value that kind of movement in short rates becomes enough to reduce 10-year forward rates by around 35bps. 18  BIS central bankers’ speeches  Looking across the full forward curve, there is a positive effect on very distant forward rates, with that effect significant up to around a 10-year horizon (Chart 2). Chart 1:  Chart 2:  Changes in short rates and 10-year forward real rates on MPC decision days  Changes in real forward rates on MPC decision days following a 100bps surprise change in short rates Average 95% confidence interval  Percentage points 0.30 0.25 0.20 0.15 0.10 0.05 0.00 -0.05 -0.10  5  10  15  20  It is not possible to distinguish from these exercises alone whether the identified movements in long-term real forward rates are driven by changes in long-term expectations or changes in term premia.

Slower growth of world activity is bound to prolong the restraining external effect on growth and inflation in the UK, even though the exchange rate has now started to weaken. At the same time there are also now clearer signs of overall slowdown in our own economy. The evidence for this is less obvious in the backwards-looking economic and monetary data than it is in the forward-looking surveys, but even so the data suggest that we are beginning to see an easing of pressure, including an easing of pressure in the labour market. And the surveys themselves now point to a slowdown in service sector growth, including retail distribution, as well as a sharper decline in manufacturing output. This prospect is consistent with the reports which we receive directly from the Bank’s network of regional agents and their 7000-odd industrial and commercial contacts around the country. Of course we pay very careful attention to this forward-looking evidence of developments in the economy alongside the data, and, like others, we have revised down our forecasts for output growth and inflation. And we have eased monetary policy quite sharply in the past two months, in the light of that evidence. Our current best guess - published in last week’s Inflation Report is that, after the interest rate cuts, the growth of overall output next year will be around 1%, picking up through the Millennium to around trend in the second half of the year 2000.
But at yearend 2011 and last June we brought our Monetary Policy Report to you in the midst of heavy external turbulence, with market expectations that did not rule out the occurrence of worst-case scenarios in the near future. Today, as in last March, we are presenting our Report in a calmer environment, but where the risks are still there. Our baseline scenario assumes that stress episodes will be repeated in the world markets. Why is that? Simply because the situation in developed economies with their complex macroeconomic, financial and fiscal problems is far from being resolved. There is a long road ahead. The classical economic policy conundrum is time consistency, as the costs are paid upfront for promised benefits for the future. Plus, in the case of the Eurozone, a difficult collective action problem, due to difficulties in spreading the cost among those involved. Thus, policy decisions are pushed back while the problems needing resolution only aggravate over time. We may add that the bigger emerging economies, including China, Brazil and India, are showing signs of a sharper than expected deceleration. Their weight in world trade, and particularly with Chile, makes us worry about their evolution. Although the copper price has been fairly stable, a further deceleration of the Chinese economy could have significant effects on the rest of the world and drive us to a complex situation, especially if it triggers a reduction in our terms of trade. Let us stop for a moment to examine the current account of the balance of payments.

The bank can sell its credit risk on the company, entirely or partially, without needing to cancel the loan or to have any discussion at all with the company. At the same time, the buyer of the credit risk (the seller of the credit derivative) does not need to tie up more than a fraction of the capital that would have been required to take over the credit directly. Moreover, the buyer of the credit risk can in turn easily sell the risk to another party, wholly or partially. Reinsurance thus becomes both simpler and cheaper to manage than with regard to traditional credit insurance. Large investors such as mutual fund companies and insurance companies often want to have a particular amount of credit risk in their portfolios. The credits can actually reduce their total risk, as the prices of the credits do not have such large covariation with other prices, for instance, the prices of shares and real estate. A certain share of credits provides a more diversified portfolio, which gives lower risk for a given expected return. Credit derivatives also makes it possible to divide up credit risks into small parts and to trade these parts at a low cost. This is not possible with traditional credit insurances. As the trade is so extensive, the pricing of credit risk becomes much improved. From the economy’s point of view, it is essentially positive that the credit risk is spread to institutions outside of the bank system.
The first session will address the challenges of digitization and how we can measure its impact on the economy. We will review how the international statistical community has had to adapt to new sources of information to develop indicators that account for the impact of this new age. Also, during the first session, we will analyze the implications of digitalization and the use of electronic invoicing data in Chile to support the activities of central banks, mainly in the fields of monetary policy, economic analysis and financial stability. Finally, we will learn about the estimation of the contribution of the digital economy to the GDP of the US. The second session will address how the globalization of production has imposed demands for greater generation of statistics that provide information on interdependence between countries. We will learn about the experience of Mexico and the US in the development of new national accounts statistics. Page 3 of 4  Central Bank of Chile October 2019  In the third session, we will see how digitalization provides us with an opportunity to integrate databases of different sources and sizes, becoming a valuable tool for the design and development of economic and financial indicators. Finally, in the last panel, we will try to find answers to questions like: What is the role of the digital economy in the decline of productivity estimates? How are we capturing the contribution of digital platforms in the labor market? And how would current statistics and macroeconomic measurements be affected? among others.

Estimation methods must be improved, and the statistical infrastructure must be strengthened to develop additional indicators describing the new digitalization-driven environment. In Chile, in order to continue leading official statistics, we have taken a number of steps to respond to the digital economy challenge:   We are closely involved in the international agenda on the measurement of the digital economy, conformed by various institutions, including the OECD, the United Nations, Eurostat and the IMF.   In the short term, one of the main challenges we are dealing with is to have an estimation for e-commerce, following the international guidelines. We expect to achieve this using a combination of administrative data and upgraded surveys collected by our National Statistics Office. Page 2 of 4  Central Bank of Chile October 2019    Regarding administrative data, Chile has built a complete and secure set of data that have helped to produce sound traditional statistics, placing the country at the forefront using this type of information. For example, this data is being used intensively as an input for National Accounts official statistics, namely, monthly indicator of economic activity, supply and use tables, regional GDP and international trade in services statistics.   Furthermore, since 2014 the CBC publishes the housing price index for Chile (HPI), which is built based on administrative data of the Internal Revenue Service, including actual transactions of dwellings. The index considers breakdowns by type of property (houses and apartments) and geographic areas.
Our new assumption for the repo rate has given rise to quite a few questions, including questions about the way in which it is used as a basis for monetary policy decisions. It has been argued by some in the discussion that our new interest rate assumption has made it more difficult to anticipate our interest rate decisions. Personally, I believe it should make it easier to understand monetary policy, and I will therefore devote part of my speech to this issue. I will also discuss the significance of our new interest rate assumption for future monetary policy. We can influence the general public’s expectations of future interest rates by being clear about our view of economic development. Our ambition is to make it easier for the general public to gain a reasonable idea of future interest rate developments. At the same time, there is, of course, considerable uncertainty about this, in particular in the longer term, which is quite simply due to the uncertainty associated with the future development of the economy. Knowledge about this uncertainty is in itself relevant for firms, households and other market participants when they obtain an idea of what will happen with monetary policy in the future. This uncertainty also means that the Riksbank cannot bind monetary policy in advance to a particular path for the repo rate. It is important that the Riksbank makes this clear in various ways.

The market may also have a different view from the Riksbank of how monetary policy will react to economic disturbances of various kinds. But we can express in different ways our assessments of policy as reflected in implied forward rates and in this way clarify our view in relation to that of the market. This also enables us to influence market expectations more directly in the short term. Let me illustrate this by some examples: In connection with the Inflation Report in October last year, we said that we thought that the implied forward rate path on that occasion gave rise to reasonable inflation developments in the coming years. Consequently, no great changes occurred in market expectations when we published the report (see Figure 2). In connection with the December report, we considered that the market was correct in anticipating an increase in the repo rate at the beginning of 2006 but that the rise might be a bit quicker in the winter and spring than that reflected by the path of implied forward rates. When the monetary policy decision was announced, the market reacted consistently this time as well by the implied forward rate path shifting in a way that reflected the expected interest rate increases taking place earlier (see Figure 3).
And considering that this $ trillion represents perhaps as little as one-fifth of the amount of ready liquidity in the U.S. financial system – that being held not just on deposit at the Fed Banks but also by nonfinancial corporations, private equity funds, other investors and households – there is a lot of inflationary tinder available should the Fed mismanage its exit from the hyper-accommodative policy we have pursued and augmented with QE3. Thus, only time will reveal the efficacy of the policy we have pursued and whether the risks that I and other observers (among them my mentor, Paul Volcker) fret over are as substantial, or whether we have made much ado about nothing. My former colleague, the wonderful ex-banker and much-admired Fed Governor Betsy Duke, was quoted on Oct. 28 in The Washington Post as saying this about QE3: “It’s still important to see what the ultimate costs are going to be. You can’t really judge those until it’s completely unwound.” 4 Betsy is spot on. Channeling Shakespeare In June of last year, I gave a speech in Toronto in which I likened the post-zero-bound monetary policy to a Shakespearean drama with five acts, suggesting we were then in the last scene of the third act of a play titled “The Grand Experiment in Modern Monetarism.” 5 I posited we will not know until the final act whether the play will end felicitously or otherwise. I thought I would update that analogy here today.

Since then, the unemployment rate has fallen by a little less than 1 percentage point each year, and wage growth has picked up by 0.2 percentage points each year. Three quarters into 2014, wage growth is already up another two-tenths, to 2.1 percent at an annual rate. This pattern of rising wage growth is roughly what one would have expected judging by prerecession data. 3 If anything, wage growth has been running a bit above what we should have expected. This contradicts the view that the unemployment rate has understated labormarket slack. Of course, the Federal Reserve has a target for price inflation, not wage inflation. The rate of wage inflation consistent with our 2 percent price-inflation target depends on secular trends in labor productivity growth and in labor’s bargaining power – trends over which the Federal Reserve has no control and about which it can only make informed guesses. Nevertheless, the Dallas Fed’s study of the Phillips curve has an important lesson for Fed policymakers: If we keep pushing on the accelerator pedal until wage growth matches the rate that we believe to be sustainable, we will likely have pushed too far and missed our exit. Because wage growth reacts to slack with a lag, it will continue to increase even after policy stimulus is removed. Because wage growth rises at an increasing rate the farther the unemployment rate declines, the overshoot is likely to be large. I liken monetary policy to duck hunting.
The high inflation rate was partly explained by rising energy prices, but prices of certain other goods had also been raised more quickly than before. Our assessment was that inflation would not change very much over the coming year and would then gradually increase as economic activity improved and there was a rise in the rate of wage increase. Our forecast was that inflation would be on target a couple of years ahead, on the assumption that monetary policy gradually became less expansionary in line with market expectations in June. International statistics received over the summer indicate that economic prospects look more favourable now than we had assumed in June. The signals regarding the US economy are mixed, however, and some indicate that growth will be weaker than expected next year. However, the picture for the euro area and other parts of the world is that developments have been slightly stronger than assumed in our earlier forecasts. With regard to the Swedish economy, the national accounts for the second quarter have confirmed our assessment in June that growth would remain strong. The statistics show that GDP growth during the second quarter was actually higher than our forecast. However, the development in the number of hours worked and the number of persons employed was weaker than expected, which reflected the fact that productivity growth had been much higher than anticipated. The new indicators received point to continued stable economic activity and to an improvement in the labour market in future.

How do developments in house prices and household indebtedness come into the picture? House prices must be given consideration in the forecasts as they affect, through the wealth effects, households’ decisions regarding consumption and saving. The size of household debts is important to the way in which interest rate changes affect consumption. However, one problem is that it can be difficult in the normal forecasting and analysis work to capture the risks that ensue from large fluctuations in house prices and other asset prices. One reason for this is that the models usually used to make forecasts do not have such sophisticated descriptions of the financial sector and its interplay with the real economy. The problems are particularly great when house prices and credit growth have over a long period developed in a manner that is not sustainable in the long term. It is simply not possible, with the analysis and forecasting tools currently available, to forecast with sufficient accuracy whether, for instance, there will be a sudden correction in house prices, or whether there will be a calmer, more protracted adjustment. At the same time, the Riksbank must take into account the risks when conducting its monetary policy. If the rate of increase in house prices and household debts remains at a high level over a long period of time, the risk increases that imbalances will build up and will force an adjustment later on, which could in the worst case have significant consequences for the real economy and inflation.
Thank you for your attention. BIS Review 115/2009  5  6  BIS Review 115/2009  BIS Review 115/2009  7  8  BIS Review 115/2009  BIS Review 115/2009  9  10  BIS Review 115/2009  BIS Review 115/2009  11  12  BIS Review 115/2009  BIS Review 115/2009  13  14  BIS Review 115/2009  BIS Review 115/2009  15  16  BIS Review 115/2009  BIS Review 115/2009  17  18  BIS Review 115/2009

As all of the central banks in the world do more or less the same things, albeit in rather different ways, it is always rewarding to see how others work. We therefore send experts in various fields out to the countries with which we have this cooperation, for instance, experts who design payment systems or make models for inflation forecasting. The other central banks send their staff to us for further discussion of these issues or to talk about other things, such as how we deregulated the financial system in Sweden in the 1980s, or how important information and transparency are if one is to run a central bank with independent responsibility for monetary policy. Recently we have received some young employees who have stayed with us for periods of a month to six weeks on “internships”, where they can, for instance, learn how to write a financial stability report from scratch. Long-term thinking is a central concept of our programme. It takes time to understand one another’s reality and to create relationships that lead to cooperation based on mutual trust. We usually say it takes at least five years. Central bank governors are always involved in various ways (both here at the Riksbank and at the other central banks), which is important for giving the programmes adequate status. In our view, it is important that we are colleagues, not consultants. We are rarely able to stay longer than a week, as we have our own central bank to manage.