samchain/econo-pairs-v1 huggingface dataset:
It’s understandable, faced with this extraordinary squeeze, that people and firms in the UK economy have sought to protect their real incomes – whether pay or profits – through compensating rises in wages and domestic prices. Unfortunately, and at least collectively, those efforts will not make us better off. It’s not as if one group or sector is worse off only because another, within the (non-North Sea) UK, is better off. The rise in import costs has depressed the purchasing power of the country as a whole. So all that can be done is to shift the losses from one place to another. And in the process, without any lasting impact on real incomes, the result is simply higher growth of nominal pay and prices. These are the “second-round effects” (of higher import prices on domestic inflation) to which monetary policy is having to respond. Today, I want to make three points about this process. First, monetary policy cannot undo the hit to real income. Nor could it ever have done. One often hears that people are worse off “because of inflation”. This is not quite right. Implicitly, it presumes that monetary policy could have prevented prices from rising so fast without doing anything to nominal incomes. Unfortunately, that’s not the case. Even assuming policy had been tightened sufficiently aggressively, and sufficiently early, to have knocked eight percentage points off the current rate of inflation, it would also have depressed nominal income growth by at least as much and almost certainly quite a bit more.

Bank of England  Page 1  The inflationary consequences of real shocks − speech by Ben Broadbent Given at Imperial College, London 20 October 2022  Bank of England  Page 2  Speech Introduction and summary Between them, the Covid-19 pandemic and Russia’s invasion of Ukraine have inflicted significant damage on the UK’s national income. Today I want to look at the link between these extraordinary shocks, the very high rates of inflation that have followed and the response of monetary policy. I will also draw one particular contrast with the potential response to easier fiscal policy. I’ll kick off with the slightly less dramatic topic of national accounting identities. One of the first things you get taught in macro-economics is that national income is equal to national output: in principle GDP measures both these things, as well as aggregate demand. Accounting identities of this sort don’t tell you anything about what causes what as they’re true by definition (though it’s useful to understand that we earn only what we produce and sell). But you might at least think, given the recovery in whole-economy output in the eighteen months since (Chart 1), that the worst of the drops in national income during the pandemic are well behind us.
Jarle Bergo: The basis for inflation targeting Speech by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), at the Foreign Exchange Seminar of the Association of Norwegian Economists, Sanderstølen, 21 January 2005. Please note that the text below may differ slightly from the actual presentation. The speech does not contain new assessments of the economic situation or of current interest rate setting. The references and the  Charts in pdf-format can also be found on the website of the Norges Bank. *  *  *  In 2004, the Norwegian Finn Kydland and the American Edward Prescott were awarded the Nobel Prize in economic sciences. They received the prize for their theoretical studies in the 1970s on economic policy rules and the importance of anchoring economic agents’ expectations. Norway’s current economic policy, with an inflation target for monetary policy and a fiscal policy rule, is partly based on the insights of Kydland and Prescott. But it is not just theory that has brought us here. Practice and experience over the last 30 to 40 years have perhaps been just as important. In his book “Doctrines and economic management in retrospect”, Hermod Skånland, former Governor of Norges Bank, points out that until the 1980s, the perception that government had to assume responsibility for employment and that borrowing should be inexpensive contributed to both the currency crisis and the banking crisis.1 Today’s economic policy can be seen as a result of a long learning process where academicians and the authorities have contributed.

Kydland and Prescott showed that room for manoeuvre in economic policy may have a price. The insight they provided was that economic policy can achieve better results if the authorities can commit themselves to a pre-established set of credible policy rules, rather than give themselves the possibility of changing policy at any given time in the future. This was a fundamentally new insight compared with the belief that the authorities had unlimited possibilities for managing the economy, a view that had dominated economic policy in previous decades. 1  Skånland, Hermod (2004): “Doktriner og økonomisk styring. Et tilbakeblikk”, Norges Banks skriftserie nr. 36 (“Doctrines and economic management in retrospect”, Norges Bank’s Occasional Papers, no. 36) (in Norwegian only). 2  See Kydland, F. E. and E. C. Prescott (1977): “Rules rather than discretion: the inconsistency of optimal plans”, Journal of Political Economy 85, 473-490. 3  Lucas, R. E. (1976): “Econometric Policy Evaluation: A Critique” Carnegie-Rochester Conference Series on Public Policy 1, 19-46. BIS Review 4/2005  1  One example used by Kydland and Prescott is what can happen when the authorities impose heavy taxes on capital today at the same time as they promise to lower taxes in the future. If firms believe this, they will increase investment now. However, when the increased real capital stock becomes a fact, the authorities may be tempted to disregard their promise of lower taxes. The purpose of reducing taxes has already been achieved. A breach of promise may be accepted once.
Why has inflation been so low? Let me now go on to address the factors behind the current inflation rate. The gauge that the Riksbank has chosen for its inflation target, the consumer price index (CPI), measures the price of a basket of goods and services for household consumption. On average, the rate of increase of the CPI has been 1.4 per cent1 from 1995, when the inflation target was introduced, through 2004 (Chart 1). The CPI is the broadest index that we use and includes the effect of our interest rate adjustments on mortgage interest expenditure. The fact that average CPI inflation has been so low is due in large measure to the Riksbank’s rate cuts in the mid-1990s, when confidence in the inflation targeting policy increased. In terms of UND1X, which excludes this effect, inflation has averaged 1.8 per cent over the same period. UND1X inflation has in actual fact guided the Riksbank’s monetary policy for a large part of the current period and is thereby also an important inflation measure when evaluating policy. In recent years, however, inflation has been markedly lower. Since May 2003 it has averaged 0.8 per cent according to the CPI. The substantial monetary easing that began at the end of 2002 and continued through 2003 and 2004 has held down households’ interest costs and thereby contributed to the low CPI inflation. But inflation has been below target in terms of UND1X as well; on average it has been 1.2 per cent over the same period.

Technology-driven innovation in the financial sector has a long history ranging from the development of double-entry book keeping, to the establishment of modern payment systems, and the more recent introduction of complex asset markets and retail financial products. Thus it seems that the emergence of fintech is only the latest wave of innovation to affect the financial industry. Then, why is fintech getting increased focus nowadays? In fact, in the last decade, a radical change has occurred in the way in which technology is used leading to proliferation of new financial products offered outside the banking system, which has brought significant competitive pressure on banks as traditional players, and created environment in which disruption can happen extremely quickly, thus urging traditional players to adjust faster to maintain market share. There are a couple of other factors that have contributed to proliferation of financial innovation besides the advancement in technology itself. Changing consumer behaviour, especially by trendy millennials, is by far the biggest driver, on the demand side. They want to engage in their own way with financial services providers, who must respond to changing demands, or risk being disrupted by entrepreneurial innovators. In a recent global study, the World Bank reported that COVID-19 is accelerating change across the board on how people interact with financial services.
In the century ahead, those skill-shifts may be about to go into reverse. To see why, we need to ask ourselves what sets of humans’ skills robots are likely to find it hardest to reproduce and replace in the period ahead. My reading of the runes is that there are three areas where humans are likely to preserve some comparative (if not always absolute) advantage over robots for the foreseeable future. The first is cognitive tasks requiring creativity and intuition (“heads”). These might be tasks or problems whose solutions require great logical leaps of imagination rather than step-by-step hill-climbing. Existing machine learning algorithms allow huge numbers of solution permutations to be tried quickly and costlessly. This allows these hill-climbing algorithms to scale local peaks in record time. Whether they scale global peaks is altogether another matter. It is harder for machines to solve problems where it is difficult to define the solution steps in a logical sequence in advance. Humans call solutions arrived at in this way “intuition”. Despite rapid progress in deep learning techniques, it remains far-harder to devise search algorithms which solve problems requiring a leap into the unknown. 58  Even in a world of super-intelligent machine learning, a demand is still likely to exist for people with the skills to programme, test and oversee these machines. Some human oversight and judgemental overlay of these automated processes is still likely to be needed. Machine design, improvement and oversight require, at least for the moment, humans and machines to operate in partnership.

History demonstrates that shifts in the quantity of money have often been driven – or at least accompanied – by shifts in the demand for deposits (i.e. what the private sector would like to hold for a given level of spending). Following the financial liberalisation earlier that decade, banks began during the 1980s to pay interest on standard deposit accounts. This increased their attractiveness, relative to other “stores of wealth” – they were not the precursor to higher spending and inflation – and broad growth remained stubbornly high even as inflation declined sharply (at least until the boom at the end of the decade). For similar reasons broad money growth was extremely strong throughout the first fifteen years of inflation targeting (1992-2007). Nor is there a tight correspondence between “narrow” and “broad” money. QE involves the creation of central bank reserves to buy financial assets (usually government debt). So in the decade or so that passed between the first use of the policy in 2009 and the onset of the pandemic, reserves grew extremely rapidly. Yet broad money growth was significantly slower than it had been before the crisis (Chart 1). And, in both periods, average inflation was close to 2% (Chart 2). Page 4  Chart 1: Reserve creation neither necessary nor sufficient for strong growth of broad money  Sources: ONS, Bank of England and Bank calculations. Unless stated otherwise “broad money” refers to M4 excluding intermediate other financial corporations (M4ex).
Therefore, we feel that the worst episode of the crisis is now behind us, which should in turn support Turkey’s economic prospects. However, it remains to be seen whether recent improvements in leading indicators will translate into a long lasting and durable recovery, since part of the rebound reflects the impact of the fiscal stimulus packages. The situation is similar across the globe: recovery has started in the global economy, yet the extraordinary policy measures taken since the last quarter of 2008 makes it harder to interpret the underlying trends. Given the elevated levels of unemployment and ongoing de-leveraging process, the recovery is likely to be gradual. Distinguished Guests, Let me close my speech by turning to the main theme of this session. Overall, I am encouraged to recognize initial signs of recovery but also I am anxious that the green shoots that have sprouted may still expose to a spring frost. “Green shoots” may not be vigorous enough and important downside risks still remain. However, unlike a couple of quarters ago, we should also acknowledge that we can now at least talk about upside risks – that is, “blossoming shoots”. Thank you. 4  BIS Review 123/2009

We have observed that criminals often get victims to click such links or download such malicious apps by putting fake advertisements for products or services such as food delivery or maid services. Recently, we have also seen fake ads for pet grooming services. On our part, the authorities and financial industry will continue to create awareness and educate the public about financial scams, including on the latest modus operandi or tactics used by the scammers. The public is advised to frequently check the Amaran Scam Facebook page by Bank Negara Malaysia, as well as Cyber Crime Alert and Semak Mule by PDRM for the latest updates. Recognising the need to intensify the awareness on financial scams, I would like to congratulate the banking industry for coming together to undertake the national scam awareness campaign. Throughout this campaign, the public can expect to see more prominent scam awareness advertisements, messages and prompts on banks' own channels as well as mainstream and social media. I understand there will also be community outreach programmes to educate the public. As digital finance becomes increasingly pervasive, and as new threats emerge, the effort to educate the public must be sustained well into the future. We cannot rest on our laurels. I would like to reiterate that the fight against financial scams is one fought on multiple fronts. We are only stronger if we work together and play our part in order to safeguard the security and integrity of our country's financial system. 2/2  BIS - Central bankers' speeches
In 2007 they had an average GDP per capita of 56.8% of the average level in the euro-zone (it was 28.2% in 1993). Although the process of income growth is present also in South Eastern Europe, its pace is slower. For the period 1996-2007, convergence was made to the income per capita in the countries of the euro-zone by 8.2 percentage points (from 20.8% to 28.9%). 2 What is clear from these  1  Source: World Economic Outlook Database, April 2008 and NBRM calculations. The indicator is unweighted average of GDP per capita of these countries. The indicators are according to the purchasing power parity. 2  Source: World Economic Outlook Database, April 2008 and NBRM calculations. The indicator for SEEU is unweighted average of GDP per capita of Macedonia, Albania, Croatia, Bosnia and Herzegovina and Serbia (for 2000). The indicators are according to the purchasing power parity. BIS Review 74/2008  1  comparisons is that the achievements are huge, but also that much more remains to be done in order to reach the level of old EU members. Why the speed of real convergence of the new EU member-states and of the candidate and potential candidate countries is different, is one of the frequently discussed questions. Taking classical theory of growth as a starting point, income actually depends on the factors of production and technological growth, meaning that the reasons for the differences should be sought in these factors.

The impressive advances in technology that have enhanced the industry’s ability to collect and process large amounts of information in real time could hardly have been suspected 20 years ago. Collecting risk data across many business lines has catalysed further efforts to aggregate those measures of risk by quantifying them in a more rigorous and more consistent fashion. The “ultimate expression” of risk aggregation is the summation of many types of risk into a single measure based on the concept of economic capital, which estimates the amount of capital a firm requires to protect itself against these risks with a certain degree of confidence. Using the concept of economic capital, banks can develop sound policies for monitoring exposure limits, risk-adjusted pricing policies and sound provisioning practices based on the inherent risks of the portfolios. They can also measure returns and assign capital on a risk-adjusted basis. Likewise, the progressive widening and deepening of financial markets and the continuous creation of new assets has enlarged the menu of choices available for banks to manage, share and transfer risks. The Basel II process started, more than 6 years ago, against this background of increasingly sophisticated risk management practices, heightened complexity in the financial markets and stronger interaction between the real and the financial economy. Rather than simply resetting the quantitative standards, we sought to develop a new forward-looking approach that would be more sensitive to the actual risks that banks take on. The new framework is a significant step towards achieving a more comprehensive and risk-sensitive supervisory approach.
Since then, the industry has lost jobs in New York City and in New Jersey. This recent job loss has been particularly significant in the city’s securities industry, which has shed nearly 4,000 jobs since April. More difficulties may lie ahead, as there have been many recent announcements of consolidations and layoffs in the region’s banking sector. Despite weak labor market conditions overall, some sectors are enjoying robust growth in the region. In particular, the professional and business services and education and health sectors have continued to add jobs. These are high-value-added services that the region can export to other parts of the country and overseas, and provide jobs that tend to be performed by highly skilled people. As such, these sectors help support the broader economy and are likely to provide a source of growth for the region going forward. It is difficult to say when the pace of job growth will pick up. As such, we will continue to monitor our region’s economy and job situation closely. Job creation in the region The fact that the recovery has been so sluggish might lead you to believe that no jobs are being created. However, this is not true. Beneath the high unemployment rate and overall slow job growth lies a considerable amount of job churning. Ongoing losses in some sectors are being offset by gains in other sectors. Today we look inside this churning for clues about how these changes are playing out in our region.

How do these changes in the labor market occur in the midst of a recession and recovery? First, many jobs are destroyed rapidly and few created as the economy weakens. This pattern is a defining characteristic of recessions. Afterward, during the recovery, employment rises as layoffs subside and firms begin to hire more. As this process plays out, some hiring will be in different industries from the layoffs. For example, some auto manufacturing jobs may never come back, while health care providers continue to add jobs. Thus, employers are adding two sorts of jobs: new and old. Some jobs are in industries that continued to expand jobs throughout the recession and weak recovery, such as health care and education. We think of these as “new jobs.” These shifts in jobs are transformational. They are part of how our region adjusts to the evolution of technology, trade patterns and consumer preferences. In addition, now that we are in recovery, a broad set of industries are beginning to add jobs to replace earlier layoffs, such as administrative support and wholesale  BIS central bankers’ speeches  3  and retail trade. We think of these as “old jobs” because they restore their industries’ share of jobs as economic activity picks up. The two recessions before the current one saw an unusually high share of “new job” creation – in expanding industries, rather than rebounds of “old jobs” – compared with recessions in the 1970s and 1980s.
Figure 1a shows how labour force participation has increased steadily from around 71 per cent just after the financial crisis to more than 73 per cent today. This positive development can probably be explained in several ways. The high population growth, which is to some extent due to a high level of migration, could be one factor. A large proportion of the immigrants who have come to Sweden in recent years have been in the age range 25 to 54 years of age, which is a group with a high labour force participation rate. Another factor could be various economic policy reforms that have increased incentives to participate in the labour force. 4 [24]  Another less positive development is the deterioration in matching efficiency. This could be a sign that companies’ requirements and the job seekers’ abilities do not match – for instance because of structural change or deficiencies in the educational system – or because the search and recruitment processes have declined in quality. It therefore becomes more time-consuming and costly for companies to recruit staff. Matching efficiency fell heavily in connection with the financial crisis, see Figure 1b. 8 This need not necessarily be a problem. During economic downturns, some types of competence become outdated at the same time as other and new competences are in demand. For the individual, this can mean that some form of further education becomes necessary. The problem is that matching efficiency appears to have become entrenched at around the same levels as in 2010.

The period following the financial crisis 2008-2009 has to a large extent been concerned with how the labour market might be affected by the rapid development in information and communication technology, especially the so-called digitalisation, which makes it possible to automate an increasing number of work tasks – both routine tasks and some more advanced ones. The increasingly rapid globalisation process, which will probably involve greater labour mobility between countries and regions, has also attracted attention. At the same time, we are moving towards a population structure with an ageing population and we have large migration flows around the world. It is difficult to know exactly how this will affect the labour market and the way it functions. I do not intend to speculate on this, but instead discuss some changes that appear to be a trend that has taken place over the past ten years. Trends on the labour market following the financial crisis Over the past ten years there has been an almost trend rise in both labour force participation – the proportion of the population of working age in the labour force – and the employment rate – the number of employed as a percentage of the working age population. This is an essentially positive development, as it reflects the fact that an increasing number of people have the opportunity to get a job and that more people have got a job.