samchain/econo-pairs-v1 huggingface dataset:
Namely, if the policy prescriptions for achieving the inflation and unemployment goals are in conflict, we will take a balanced approach promoting the return to each, taking into account the size of the deviations and the relative  3  2  See FOMC (2005). BIS central bankers’ speeches  speeds at which convergence can be expected. As we all know in this audience, there is an enormous literature related to characterizing the monetary policy loss function for a central bank with a dual mandate – such as work by John Taylor, Lars Svensson and Michael Woodford.4 For me, our Federal Reserve dual mandate responsibilities are well captured by a quadratic loss function that equally weights squared deviations of inflation and unemployment from their period goal values. In the U.S. today, that would be 2 percent for inflation and 5-1/4 to 6 percent for unemployment given today’s structural challenges in the labor market.5 Just about every major central bank around the world publishes something akin to such a framework statement. In one way, the Federal Reserve is different because, unlike other countries, we have a dual mandate, and so our framework explicitly addresses goals for both inflation and the real side of the economy. But just about every bank with a single price stability mandate also says that it will avoid undue disruptions to the real side of the economy when pursing its inflation goal. Indeed, some are quite clear about following a flexible inflation targeting strategy. Policy projections What about the policy projections?

Let me finish by saying that this crisis underlined the need for policy makers to have a holistic approach to tackle all the sources of gender disparities which are entrenched in the institutional, regulatory, educational and even traditional setting norms. Thus focus on overcoming the crisis, which is definitely a burning issue for all of us, should not be a reason to sideline the fight for gender equality. On the contrary, it should reinforce it. Thank you. 3/3  BIS central bankers' speeches
That survey does not refer to a specific price index, so given that the average wedge between perceived inflation in the survey and actual CPI inflation is 1 percentage point, the proportion refers to the households that expect that inflation will be 3% or higher two years ahead. BIS central bankers’ speeches  9  risk derailing recovery by tightening and being unable then to course-correct. I have considerable sympathy with this risk-management approach. Table 3 provides an illustrative list of countries which have pursued the latter strategy – tightening during a post-crisis recovery and then course-correcting. The most celebrated (if that is the right word) was the Fed’s tightening in 1937. This is felt by many to have sent the US economy back into recession (Friedman and Schwartz (1963)). Almost 80 years on, the scars from that experience have yet to fade. The US experience in the 1930s was special, but not unique. In few of the cases in Table 3 did things go well. In each case the tightening was subsequently unwound. In a number of cases it had to be more than unwound due to its contractionary effects on the economy. Chart 19 shows the average path of output either side of the tightening. Most of these countries experienced several years of robust growth prior to the tightening, suggesting the economy was primed for lift-off. Yet when lift-off came, annual output growth weakened by around 2 percentage points in the following year, in the US by much more.

If there is no risk premium, the uncovered interest rate parity relates interest income in the domestic economy with interest income in the foreign economy via the expected change in the exchange rate. For a better understanding we may use the example of our current situation. The one-year interest rate in the Eurozone is slightly above 4%, while the Czech one-year interest rate is less than 3%. In spite of this negative interest rate differential we still see many investors holding Czech crowndenominated assets. Why? Simply because financial market participants expect the Czech crown to appreciate in the future and thus compensate for the negative interest rate differential. Although the uncovered interest rate parity has been heavily criticised and disapproved as being practically non-functioning, it is used in macroeconomic models. Well, as an economic modeller you simply do not have any other option. The uncovered interest rate parity is directly implied by the profitmaximising behaviour of financial market participants. We probably all agree that the behaviour of financial market participants is led by profit maximisation (given the level of risk). At the same time, however, surely at least a few of you here in the audience would seriously argue that a relationship such as the uncovered interest rate parity does not hold in reality and that it is a purely theoretical concept. The uncovered interest rate parity is, however, implied by the profit-seeking mechanism.
Let me put it differently: is potential growth in those economies being affected by the fact that one part of the world, with nearly two-thirds of its population, is growing on average by 6–7% (or more) per year? If so, in what ways? One hypothesis which we may want to assess and test is that the so-called “long term equilibrium” variables which are so important in our economic models are in fact affected by globalisation, as advanced economies are becoming smaller and smaller. Not taking this into account may induce policy-makers to misjudge the situation and cause international surveillance to fail. These are clearly very difficult issues to examine. However, it seems to me that the analysis so far is insufficient. I won’t go into detail but would just like to pose some questions. Growth The first issue, or question, I would like to raise is whether the increase in growth rates in EMEs has had, and will have, a negative or a positive impact on trend growth in advanced economies. Taking a standard neo-classical trade model, the answer depends on various assumptions. The prevailing consensus is that globalisation provides opportunities for all, including advanced economies; their growth will not necessarily suffer. This is the conventional wisdom.

In 2014, payment cards were used for more than 47 billion transactions in the European Union, that is to say a level almost identical to the overall combined number of transactions involving credit transfers and direct debits, respectively the second and third most used payment instruments. In France, payment cards were used in more than 50% of all non-cash payments transactions, amounting to nearly 9.5 billion operations in 2014, compared to only 3 billion transactions in 2001. The specificity of card payments is that they occur for transactions of a relatively small amount € in average in France), making it the strongest alternative to cash for proximity payments. This situation is the result of years of efforts made by market stakeholders to build a secure, efficient and convenient payment instrument. The French community was at the forefront of such evolution with the early adoption in 1992 of chip for payment cards, which has been followed by the introduction and the subsequent widespread adoption of the EMV standard. This latter evolution has been the cornerstone of the uptake of payment cards by allowing fast and secure transactions through Europe. This predominance of payment cards may nonetheless be at stake nowadays, with the conjunction of three main trends that have a disruptive effect on the market: new solutions, new behaviors and players, new regulations. First, innovative payment solutions based on SEPA schemes are very likely to emerge.
The rise in SWFs is closely linked to the global macroeconomic imbalances that have characterized the world economy since the mid 1990s. Since these imbalances are unlikely to unwind in the near term, SWFs are likely to keep growing disproportionably for some time. The rapid rise of SWFs has undoubtedly brought a number of benefits. One of them has recently become particularly evident. Against the backdrop of the current market turmoil, SWFs have been a welcome source of capital, strengthening the vulnerable balance sheets of some of the world’s largest financial institutions. I will return to this important point at the end of my lecture. But the investments made by SWFs have also given rise to considerable political controversy and media coverage. Slide 2 provides a sample of some of the most pertinent recent headlines. The political controversy does not derive from the fact that SWFs are new. They are not. Political leaders are anxious because the rapid rise of SWFs and their increasing visibility as large investors in mature markets challenge some long-held assumptions about how the global economy works. In the process, the investment decisions of SWFs run the risk of triggering defensive reactions in mature countries. If left unchecked, this process could feed financial protectionism, which would clearly be to the detriment of global economic welfare. To provide some context, I will first describe the rise of SWFs. I will then discuss in more detail what I view to be the primary challenge arising from SWFs.

1  See A. Espitia, A. Mattoo, N. Rocha, M. Ruta and D. Winkler (2021), Pandemic Trade: COVID-19, Remote Work and Global Value Chains, Policy Research Working Papers, no 9508, World Bank  2 www.ecb.europa.eu/press/key/date/2017/html/ecb.sp170825.en.html 3 www.oecd.org/officialdocuments/publicdisplaydocumentpdf/? cote=ECO/WKP(2018)63&docLanguage=En#:~:text=We%20find%20that%20the%20EU%20ETS%20led%20to%20a%20statist  4/4  BIS central bankers' speeches
This crisis, however, shows that this view is painfully wrong. In fact, a financial bubble and even a credit boom, can have little or no effect on inflation, but that is not the point. 6  BIS Review 124/2008  Furthermore, an interest rate increase is probably unable to burst the bubble. But an excessive expansion of credit in the context of financial euphoria jeopardizes the other objective of central banks: financial stability. One important lesson from the present crisis is that we cannot wait for the bubble to burst to correct its effects. This may have worked with the technological bubble of the early 2000s, but the real-estate boom is proof that the problem can be worse. The way to deal with financial and price instability is different. For the first, the focus is on risk regulation and evaluation by the authorities. Detected vulnerabilities must be flagged and, if necessary, new regulations must be adopted. For price stability, there is monetary policy. It may well be the case that price stability and financial stability have different implications on interest rate management. The best example of this is the aggressive reduction of interest rates adopted by the Fed this year. Interest rate cuts were necessary to alleviate liquidity tensions in monetary markets and ensure the sound operation of the payments system. Failing to take these actions might have further exacerbated the financial crisis. However, conflicts of this kind are faced in extreme situations and this must be clear when making monetary policy decisions.

Overall, one cannot rule out that investors’ buy and sell strategies will have an effect on the high short-run volatility of prices, but it is difficult to blame on them the high and persistent levels we see today. The worst nightmare in terms of high inflation and low output has been the price of oil, which has broken all the records. After standing at $ per barrel in 1999 as a consequence of the Asian crisis, it started climbing throughout the 2000s in tandem with world growth. By mid-2006, when the oil price was approaching $ per barrel, the question was why the world economy was so insensitive to it. Researchers tried to explain why such a heavy price increase had been so mild on inflation and output (De Gregorio et al., 2007; Blanchard and Galí, 2007). Fingers pointed at the usual suspects: good monetary policies and less intensive use of oil around the world. In sum, the world economy was more insensitive to the oil price. However, if oil demand continued to rise without a corresponding increase in supply, a large enough price rise was necessary to begin having an effect on the demand. The levels of a couple of years ago were not enough to restrain the demand, and precisely because of that, researchers found little effects from the shock on output and inflation.
25  All speeches are available online at www.bankofengland.co.uk/speeches  25  Chart 18: Sensitivity of UK 3-year government spot interest rates to economic surprises Rolling 1-year sensitivity 95% CI  0.8  UK 3-year  0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 -0.1 2004  2007  2010  2013  2016  Source: Bloomberg and Bank of England calculations. Notes: The chart shows the rolling 12 month beta coefficient of a regression of the UK Economic Surprise Index (ESI) on daily changes of UK 3-year interest rates, with a 95% confidence interval. The ESI is calculated as the weighted sum of data surprises across the UK, US, euro area, Japan and China. The data series included in the ESI, and the estimated weights are based on their historical relationship with daily changes in UK interest rates. The axis shows the impact of a 1 standard deviation data surprise on UK 3-year interest rates. The dashed line shows the 2004-2017 average for the beta coefficient. 26  All speeches are available online at www.bankofengland.co.uk/speeches  26  References Abel, W, Burnham, R and Corder, M (2016), ‘Wages, productivity and the composition of the UK workforce’, Bank of England Quarterly Bulletin, Q1, pp. 12-22. Bank of England (2016), ‘Factors affecting the prospects for long-term supply following the EU referendum’, Bank of England Inflation Report, August, pp. 29. Blanchflower, D (2007), ‘Entrepreneurship in the UK’, speech at the Max Planck Summer Institute on Entrepreneurship Research.

These banking reforms, like all the others now under way (on public spending, pensions and the labour market), should surely have been carried out during the years of expansion, when everything seemed to be going well and the problems that would eventually surface because of the imbalances that were building up were blithely ignored. Unquestionably, we would not now be facing the problems then being incubated and which have now emerged with the crisis. Regarding what has been done so far, it would be unfair not to mention the contribution of the EU authorities, since although there were initially some serious communication and coordination problems, the fact is that subsequently they took appropriate measures aimed at imposing greater economic discipline and improving confidence, such as the reform of economic governance and the Stability and Growth Pact and the recent “Pact for the Euro”. And, of course we cannot overlook the ECB’s contribution with its policy of providing unlimited liquidity and its programmes to purchase covered bonds and the government bonds of the countries hit hardest by the crisis. In short, at this stage it can now be said that both the authorities and private agents have made considerable efforts in the right direction and that, as a result, the process of adjustment of the banking sector and of the Spanish economy as a whole is progressing reasonably well.
Improvements in fiscal institutions, fiscal rules, public-private partnership, foreign financing partly in the form of grants, improvements in public investment management frameworks are some of the possible “remedies” that might generate improvements in the infrastructure in the CESEE region. 3. SMEs’ investment activity and access to finance  Apart from the needs for investment in infrastructure, as mentioned above, apparently what the region is also in need of are the investments in more technologically advanced and innovative segments, investments that are very often led by SMEs, or start-up companies. In order to grow and to be economically productive, this sector needs stable sources of financing. Without access to finance SMEs are unable to invest, which impairs their capacity to improve productivity, raise competitiveness, promote innovation, generate employment, and contribute to economic growth and development. And the importance of the SMEs sector is continually increasing. According to some studies, majority of enterprises globally are SMEs, accounting for approximately more than a half of private sector employment. In fact, the latest data on SMEs in the EU, as well as some of the countries in the region, confirm the importance of this sector in terms of the number of companies, its share in the total value added, as well as in the total employment. 6  Transition report 2015-2016 “Rebalancing Finance”, European Bank for reconstruction and development.

Transition report 2015-2016 “Rebalancing Finance”, European Bank for reconstruction and development. 7  Chart 8: Quality of infrastructure in CESEE region vis-à-vis EU 28 Quality of infrastructure index (difference in p.p.) Real public capital stock, per capita, % of EU-28  0.0  0.80  -0.5  0.70  -1.0  0.60 0.50  -1.5  0.40  -2.0  0.30 -2.5  CESEE  CEE  SEE  2015  2013  2014  2011  2012  2009  2010  2007  2008  2006  2004  2005  2017-2018  2002  2010-2011  0.20  CESEE  2003  2007-2008  Baltics  2000  SEE  2001  CEE  Baltics  Source: World Economic Forum, IMF Investment and Capital Stock Dataset (2017) and NBRM calculations. Complementary and equally important question is whether CESEE countries invest in costeffective, viable and long-term growth supportive projects. Largest part of infrastructure projects in CESEE region is publicly financed (60-70% in transition countries, compared with 15 to 60% in the EU15 economies6). This is problematic because of two reasons – first, public resources may become insufficient for infrastructure financing, given the tight fiscal constraints and rising public debts and second, in practice, very often, public investment decisions are not guided by economic rationale which might lead to inefficient and unproductive projects.
For a small, open economy like Sweden the natural starting-point for the forecasting work is how economic activity and inflation develop in the world around us. The forecasting work therefore begins with an international outlook meeting, which has the purpose of reaching a preliminary forecast for international events. Soon after this a financial market meeting is held. At this meeting there is a discussion of market participants’ expectations of the repo rate and how these have changed since the previous monetary policy meeting. These are then compared with the model forecasts for the repo rate and how these have changed. In addition, there are analyses and discussions of what has happened in the financial markets since the previous assessment. House prices, credits, stock market rates, exchange rates, money supply, international rates and so on are also discussed at this meeting. After this a current status meeting is held, where the focus is on the current situation in the Swedish economy. One particularly important aspect is to assess how much of the Swedish economy’s total resources in the form of labour and machinery are currently being used to a normal extent. Apart from new information on the current economic situation, there are also discussions of other new information that may be important for the forecasts in the slightly longer term. The first monetary policy group meeting with the Executive Board summarises new information After this it is time for the first large monetary policy group meeting.

This is the case when a Monetary Policy Report is going to be published; otherwise the process is slightly shorter. In total, around 30  4  BIS Review 77/2008  economists are involved in some phase of the forecasting work, together with the Executive Board members. The material for the monetary policy meetings is mainly produced in the Monetary Policy Department in close cooperation with the Executive Board. The process begins with a risk meeting. The participants at this meeting are the Executive Board, employees of the Monetary Policy Department, some employees from other departments and some advisers to the Executive Board. The purpose of the meeting is to capture at an early stage various types of risk and alternative sequences of events for the economy that we envisage in the future. The discussions at this meeting are relatively unbiased and take a broad perspective. It is at this meeting that the alternative scenarios begin to take shape, those that are later described in Chapter 2 of the Monetary Policy Report and that show how the economy might develop if particular events occur. The scenarios can be used as a kind of counter-example to explain why the Executive Board considers that the main scenario is the one that at present gives the most well-balanced monetary policy. It can also illustrate different risks that an individual member wishes to illustrate or perhaps even a scenario that one person prefers instead of the main scenario.
The experience of previous periods of wide variations in commodity prices indicate that rising prices gradually lead to increased supply and reduced demand. This in turn leads to a fall in prices. Lower futures prices than spot prices for several industrial metals indicate expectations of a price fall. High oil prices over a longer period have boosted petroleum investment. Increased investment activity on the Norwegian continental shelf has accounted for a large share of growth in domestic activity in recent years. There is substantial uncertainty associated with future petroleum investment. The emergence of new, smaller companies will probably contribute to a steady level of investment in a number of small and medium-sized projects in the period ahead. Petroleum investment is expected to remain at a high level in the years ahead, but growth is expected to be more moderate. According to the fiscal rule, the spending of petroleum revenues over time shall be in line with developments in the expected real return on the capital in the Government Pension Fund – Global, estimated at 4 per cent. In the National Budget for 2007, it is estimated that the real return on the Government Pension Fund – Global, measured in NOK, will increase sharply in the years ahead. Oil futures prices are higher than assumed in the National Budget. On the other hand, new forecasts from the Norwegian Petroleum Directorate show that petroleum production in the next few years may be significantly lower than assumed in the National Budget.

2/4  BIS central bankers' speeches  In the exercise of their supervisory mandate, central banks can contribute to this by reconciling the need for openness and support for innovation, which is inherent to an economy integrated into world trade for the benefit of consumers, with their fundamental mission as guarantors and promoters of sound risk management. But they can also contribute through their two other traditional channels, namely as a catalyst and a provider of settlement services in central bank money. A- I believe that this catalyst role is important in the field of retail payments. Commercial bank money is the predominant settlement asset in France, even though the use of banknotes and coins remains significant in this country, as in most of the European Union. This variety of means of payment, based on settlement assets that can be exchanged at any time at par, is an advantage that I believe should be preserved for several reasons: on the one hand, because of the financial inclusion responsibility, since the most vulnerable populations are also the least banked; but also with a view to diversifying risks, in the event of a widespread failure of electronic payment systems. However, it is commonly believed that in Europe there is a risk of a fragmentation of cashless means of payment and a dependence on dominant foreign players that benefit from the effects of global networks.