samchain/econo-pairs-v1 huggingface dataset:
A perceived comparative advantage of the United States in creating “high quality” financial assets from real investments may also have played a part (Caballero, Farhi and Gourinchas, 2008). This resulted in downward pressure on the yields on government bonds and other safe assets, and upward pressure on asset prices generally. Low long-term safe interest rates would also have encouraged the shift into riskier assets through the risk-taking channel described above. Second, the lead-up to the crisis was also a long period of steady growth coupled with low and stable inflation (the Great Moderation). 2 Households, businesses and market participants were consequently faced with a complex signal-extraction problem: how much of this reduction in economic volatility was permanent? Whereas many economic signal extraction problems involve learning about the first moments of a distribution, this involves making inferences about higher moments. The longer such a period of low volatility lasts, the more reasonable it is to assume that it is permanent. But given the necessary infrequency with which tail events occur, there may be a natural tendency for people erroneously to conclude that they could never happen simply because none have materialised recently. Certainly market measures of uncertainty are consistent with this idea, as measures of volatility implied from options prices (such as the VIX) suggest that the perceived risks in financial markets had shrunk to extremely low levels by 2006.

One obvious example is that the properties we want an e-krona to have will affect what technology we can use. The e-krona project will also need to be run in different phases. As a possible e-krona can affect the financial sector and the economy in so many different ways, there are many and complex questions that must be answered, and the answers are often interdependent. It is therefore wise to begin by creating a full list of all of the possible questions and surveying the most important deliberations and interdependencies. 9 [10]  Only after this, in a second phase, will it be possible to begin answering the questions and in this way gradually identifying which answers give the best target-fulfilment as a whole. If we do this work properly, at the end of the second phase we will have a set of answers that provide a good picture of how we want the e-krona system to look. Here of course the Riksbank can decide either to conclude the project or to proceed further. If the Riksbank decides that the e-krona system would promote the safety and efficiency of the payment system, the next step will be to construct such a system. I believe that the Riksbank has never before launched such a complicated project in such an unknown area. The complexity of course gives rise to risks and uncertainties throughout the project, something we will need to compensate for by being flexible.
In addition, we are currently emphasising the fact that, as a result of the low rate of inflation and the risk of appreciation, the minimum exchange rate will be the focus of monetary policy implementation for the foreseeable future. So you see, the SNB is carefully monitoring international debates about the right objective and the best way of communicating monetary policy. Nevertheless, no central bank should simply jump on the latest monetary policy bandwagon without careful consideration. On the contrary. Changes must be undertaken with great caution and care. Our monetary policy strategy worked well during the crisis, so there is no reason for us to abandon it. This also applies to the way we communicate, where – obviously – the demands are particularly great in times of crisis, and it is necessary to focus more than ever on the key messages. To avoid any misunderstanding, these messages must be simple and absolutely clear. Nevertheless, words alone are not always sufficient. A central bank must be prepared to back up its words by deeds. A good example of this was the situation in early summer 2012. With the European debt crisis escalating and, as a result, extreme upward pressure on the Swiss franc in the currency market, we rigorously enforced the minimum exchange rate through extensive foreign currency purchases. I would like to make a final point on monetary policy. During the crisis, central banks worked particularly closely together at the international level.

Zamani Abdul Ghani: Research and development in the financial services industry in Malaysia Speech by Mr Zamani Abdul Ghani, Deputy Governor of the Central Bank of Malaysia, at the Malaysian launch ceremony of the IBBM-University of Nottingham Financial Services Research Forum, Kuala Lumpur, 23 June 2006. *  *  *  I would like, first of all, to thank the organisers for inviting me to participate in the launch today of the IBBM - University of Nottingham Financial Services Research Forum today. This Forum represents an important strategic platform for financial services providers, regulators and the academia to collaborate in joint research in financial services-related areas, and to share the findings among its members. In fact, we have among us today representatives from universities in Malaysia as well as Malaysian conventional and Islamic financial institutions. Indeed, this is a highly commendable alliance, as the benefits will be reaped by all members. Let me take this opportunity to congratulate IBBM for being the first institution outside Europe to participate in the University of Nottingham Financial Services Research Forum . Ladies and Gentlemen, Today's event marks yet another important milestone for the financial services industry in Malaysia. The IBBM-University of Nottingham Financial Services Research Forum will pave the way in the intercontinental dialogue and research initiatives in the financial services industry. This collaborative effort is a positive development as it supports the Government's initiative towards a knowledge-based economy, in which joint research between the academia and the industry is encouraged.
7 One implication of a relatively stronger exchange rate channel may be that, in the future, it may become even more important to small, open economies. This, in turn, may entail a number of complications, as exchange rate adjustments are sometimes associated with attempts to manipulate the value of a country’s own currency and “beggar-thy-neighbour” policies. However, as I have said, this is only a hypothesis so far, and more empirical evidence is needed regarding how globalisation has affected the monetary policy transmission mechanism. The debate on how much large central banks’ actions affect monetary policy in small countries will continue, as will the general discussion of the effects of globalisation on the possibilities for monetary policy. However, at present, it seems reasonable to assume that the low global interest rate poses a greater challenge when it comes to which monetary policy can be conducted in countries such as Sweden. 6  Caceres et al. (2016) define autonomy-restricting effects of foreign interest rates as the response in the domestic interest rate above and beyond what is justified by domestic economic circumstances. They find that, with this definition, the empirical analysis indicates significantly greater monetary policy autonomy in small, open economies than more traditional estimates suggest. See also Disyatat and Rungcharoenkitkul (2015). 7  See Meier (2013) and Georgiadis and Mehl (2015).

It may also be difficult for an individual central bank to raise the inflation target alone as long as an international debate is underway on whether or not a higher target would be advantageous. 13 There may be reason to wait for a reasonable degree of consensus among central banks and in the research community. If the conclusion were reached that raising the inflation target would be justifiable, this would probably also increase the possibility that several central banks would simultaneously decide to do so. This would probably further increase confidence for such a measure. Greater acceptance of falling short of the target? If monetary policy should now turn out to be less effective in the period ahead than it has been historically, one consequence could be that the central banks would be forced to accept below-target inflation for longer periods of time. This would make it important to try to create acceptance for this among households, companies and market participants, so that these do not start to believe that the central bank has abandoned the inflation target. Expectations among economic agents would thus play a completely central part in this. The problem can be illustrated, in a stylised manner, with the use of Figures 3–5. To maintain the credibility of an inflation target, inflation cannot be allowed to deviate from the target indefinitely. Economic agents can tolerate a deviation in the short term, but, the more time that passes, the closer to target inflation has to be to maintain confidence.
Their conversations during the 1930s, at the height of the Great Depression, are eerily reminiscent of the enormous challenges we face today, as you can see from the following exchange in 1930: KEYNES: Is not the mere existence of general unemployment for any length of time an absurdity, a confession of failure, and a hopeless and inexcusable breakdown of the economic machine? STAMP: Your language is rather violent. You would not expect to put an earthquake tidy in a few minutes, would you? I object to the view that it is a confession of failure if you cannot put a complicated machine right all at once. KEYNES: In my opinion the return to the gold standard in the way we did it set our currency system an almost impossible task ... If prices outside this country had been going up since 1925 that would have done something to balance the effect on this country of the return to the gold standard. STAMP: Hush, Maynard; I cannot bear it. Remember, I am a Director of the Bank of England. In some respects our experience today is no different: putting right our economic machine is proving a slow and difficult task. But in the 1920s the Government made the task substantially harder by reinstating the gold standard at a rate that left sterling overvalued. Today, monetary policy is part of the solution, not part of the problem. That is thanks, in large part, to the monetary framework we have had in place since 1992.

I believe many of those present here have a special interest in developments in the exchange rate, and will therefore discuss this in more depth towards the end of the address. The economic situation and the orientation of monetary policy The Norwegian economy is now in a cyclical upturn. Over the past three years, mainland GDP has grown by approximately 4½ per cent annually, and the strong growth has continued in 2007. In the first half of the year, annualised growth was close to 6 per cent, and even if GDP growth in the third and fourth quarters should be zero, annual growth will be well over 4 per cent. As the chart shows, there have not been four consecutive years with such strong growth since 1971. At the same time, productivity growth in the Norwegian economy has been strong, and the supply of labour has been ample. The growth capacity of the economy has therefore been high. Low interest rates, growth in public demand and in petroleum investment and vigorous international growth have resulted in high income growth in the household and business sectors. Moreover, low interest rates have made it more profitable to bring forward consumption. In addition to contributing to the increase in actual income, the sharp improvement in the terms of trade may have raised households’ income expectations. On balance, this has boosted demand for goods and services. So far, there are few signs of a slowdown in the Norwegian economy.
Figure 12 IPEC  IMCE  (diffusion index)  (diffusion index)  Trade Construction Manufacturing IMCE without mining  IPEC (1) 80 IPEC: inflation (2) IPEC: unemployment (3)  80  Political and economic uncertainty (Depuc) (4)  60 60  (index, 1 January 2012 = 100)  500 400 300  40  40  200  20  20  0  0 18  19  20  21  22  100 0 18  19  20  21  22  18  19  20  21  22  (1) A value above (below) 50 indicates optimism (pessimism). (2) Percent of respondents who believe that prices will increase "a lot" in the next 12 months. (3) A higher (lower) value indicates more (less) unemployment. (4) Moving 30-day average. As from December 2021, the index includes an update to the dictionary of words used for its construction, as a way of incorporating new elements that influence the local scenario. Sources: Gfk/Adimark, Icare/Universidad Adolfo Ibáñez, and Central Bank of Chile based on Becerra and Sagner (2020).

Growth was primarily driven by manufacturing, which benefited from  Page 2/4  Berne, 14 December 2017 Thomas Jordan  News conference  dynamic global economic developments and the weaker Swiss franc. Accordingly, exports recorded marked gains. Investment in equipment also grew noticeably. In the wake of this development, capacity utilisation in manufacturing increased further. The overall economic situation improved, too. Higher capacity utilisation, a more robust earnings situation and favourable global economic prospects contributed to a further rise in business confidence. These factors generally strengthen the willingness to invest. The gradual recovery on the labour market has also continued. The unemployment rate declined again slightly through to November. The demand for labour among companies has gradually picked up. Due to continued pressure on prices and costs, however, businesses are only cautiously increasing their headcounts. Employment growth is therefore likely to remain moderate. Given the supportive global environment and favourable monetary conditions, the recovery in the Swiss economy looks set to continue in the coming months. For 2018, we expect GDP growth of around 2%, following 1% in 2017. Compared to the current year, 2018 should be characterised by stronger growth stimuli mainly from exports and corporate investment. Inflation expectations, interest rates and exchange rates  I will now review changes in inflation expectations and monetary conditions. Inflation expectations for Switzerland have remained practically unchanged over the past half year. Households and companies still expect low inflation of around 0.5% in the short term. In the longer term, expectations lie at approximately 1%.
However, long periods of low interest rates unavoidably create incentives for risk taking and “search for yield”. That dilemma can, in principle, be solved through proper macroprudential policies. I will return later to challenges we face in that specific area. The meaning of price stability Let me start with a crucial point. Central banks have a strong mandate to preserve and achieve price stability. Strict adherence to this mandate – and the clear willingness to fulfil it – is their main protection against the dangers created by the zero lower bound. As we all know, inflation is ultimately driven by expectations. Inflation expectations were remarkably stable during the whole first decade of the euro. Today, the major risk in the euro area is a downward drift that would durably set long-run inflation expectations at a level below our objective of price stability. We do not know much about how expectations are formed. However, I have no doubt  BIS central bankers’ speeches  1  that the perceived reaction function of the central bank plays a major role in anchoring price stability. Second, symmetry is of the essence. For a significant period of time, we have been well below our definition of price stability in the euro area, both in terms of effective inflation and long-term expectations. There is a temptation to take a benign view of this situation and consider that low inflation is beneficial per se, irrespective of its level.

This may come at a cost in the longer run, however, as price rigidity impedes the adjustment process and reduces the efficiency of monetary policy. A large part of the perceived differences between the FED and the ECB in terms of policy reactions results, in fact, from differences in price flexibility. Because of specific rigidities in Europe, the fall in inflation that normally follows a decline in output materialized later and more slowly. Moreover, it notably happened after several governments had implemented a series of structural reforms and adjustment policies in 2010–2011. This explains part of the delay in implementing non-conventional measures in Europe, as compared to the United States. A third challenge comes from managing the risks that low interest rates and nonconventional policies imply for financial stability. Significant advances have been achieved in developing proper macroprudential frameworks and instruments for the banking sector. Strong capital and liquidity requirements have increased its systemic robustness. New countercyclical tools have been developed. Progress has been made towards reducing moral hazard through proper resolution mechanisms for large and systemic institutions. However, the timeliness and efficacy of macroprudential measures on specific areas of exuberance, such as real estate, are still being put to the test. More importantly, I see one blind spot. Risk has not fully disappeared but rather has morphed and migrated to new parts of the financial system. Specifically, maturity transformation has developed outside the banking sector and by direct market intermediation.
In short, the peripatetic pound has caused, and continues to cause, severe headaches for economic policymakers. But was currency instability really the cause of those headaches in the past, or was it simply the effect of bad policies? Some of both is the answer. Large movements in sterling can create problems for monetary policy, as we have seen very recently. Equally, the absence of a credible monetary framework means that the currency is likely to be volatile. Sterling crises of the past reflected an absence of monetary stability. Inflation has eroded the value of money to the point where the purchasing power of £ in 1950 has been reduced to less than a shilling, or 5p, today. The failure to control inflation led to excessive expansions of the economy, and the subsequent struggle to bring inflation back down resulted in severe recessions. This country experienced the sharpest decline in output of any G7 economy in the early 1980s. And in the early 1990s only Canada had a more severe recession. Eventually, the realisation that inflation did not generate sustainably higher output and employment produced a determination to restore stability to the UK economy. Since our departure from the ERM, in September 1992, successive governments have put in place institutional changes that would deliver stability. First the inflation target and then independence of the Bank of England, with the new Monetary Policy Committee (MPC), have put us firmly on course to achieve monetary stability.

Preemptive action to slow domestic demand growth to a more sustainable level is the key to avoiding a larger and more painful adjustment at a later date. That is why the MPC has raised interest rates by 100 basis points since September. I hope you now understand why our ambition is to be so boring. Our aim is to maintain economic stability. A reputation for being boring is an advantage - credibility of the policy framework helps to dampen the movement of the see-saw. If love is never having to say sorry, then stability is never having to be exciting. Miss Prism should not have to tell future Cecilies to omit the chapter on the activities of the Monetary Policy Committee. 3  BIS Review 34/2000
04.11.2020  Testimony before the Parliamentary Budget Committee in relation to the Draft State Budget for 2021* Pablo Hernández de Cos Governor  *Traducción al inglés del discurso original en español  Ladies and gentlemen, I appear before this Committee as part of the process to discuss and approve the State and Social Security Budget for 2021. The main aim of this Budget should, in my view, be to provide for the recovery of the Spanish economy in the coming quarters and to mitigate the considerable adverse impact caused by the COVID-19 pandemic to our economic growth and welfare. I shall begin by first describing the recent behaviour of the Spanish economy and, against a background marked by exceptional uncertainty, its possible course in the coming quarters, in light of the Banco de España’s projections. This description will allow me to assess the Government’s macroeconomic forecast which, as is habitually the case, frames the Draft Budget. Secondly, I shall offer my view of the main aspects of the Draft Budget for 2021, including the fiscal policy stance, its composition and the risks to the budget deficit target being met. Lastly, I shall set out what I consider to be the most significant challenges for Spanish fiscal policy in the medium term.

Admittedly, since the publication of our latest projections more details have become known on the use that could be made of the NGEU programme in Spain in the short term (many of which are included in the Draft Budget we are addressing here today). But notable uncertainty persists over the ultimate level of actual execution of this programme in Spain, and over the capacity of the potential projects finally selected and implemented to increase the Spanish economy’s growth potential. I shall refer again to this matter when discussing the macroeconomic forecasts of the Draft Budget. But first, allow me to mention one final factor which, undoubtedly, has critically influenced recent Spanish and global dynamics. It is a factor that will continue to play a key role in the coming quarters and years in managing and overcoming this crisis. I refer here to the economic policy response. To date, the measures taken by economic policymakers (in the fiscal, monetary, labour market and financial areas) in response to the outbreak of the pandemic have most significantly mitigated its impact. They have eased the downturn in real activity and in economic agents’ income and liquidity, and they have headed off the materialisation of systemic risks to the functioning of the financial markets and banks’ financial stability. From the outset of the health crisis, fiscal policy, both in Spain and in most developed countries, has reacted resolutely.