samchain/econo-pairs-v1 huggingface dataset:
5  The young and already internationally renowned economist Jeffrey Sachs called on the then Secretary General of the OECD, Jean-Claude Paye, immediately after the collapse of the former Soviet Union. Sachs claimed that all that was needed to get the economy moving was to liberate Russia’s animal spirits. Paye demurred, saying that he thought that institutions would matter too. Sachs countered, saying “But you are French, and so you think that institutions are more important than they really are.” To which Paye replied “And you are young, and take your institutions too much for granted.” And then he added, almost as an afterthought, “If you do not have good, strong institutions, all you will get will be the mafia.” E-mail correspondence from John Llewellyn, former colleague of Paye’s, dated 3 November 2013. 6  Acemoglu, D. and J. Robinson (2012): Why Nations Fail: The Origins of Power, Prosperity and Poverty, Crown Publishers, New York. 7  Acemoglu and Robinson are not alone in attempting to capture institutional differences using concept pairs. In a historically based social analysis, North, Weingast and Wallis use the distinction between natural state and open access societies as reference for stage of development. The former was a strongly hierarchical society with tightly woven personal bonds with a clear social order. Collaborating elites had a monopoly on violence and dictated the allocation of resources. In an open- access society, on the other hand, the state holds power but there are institutional constraints.

But risk and high yield often go hand in hand and it must be assumed that equity prices can fall just as easily as rise. The Central Bank has assessed the banks’ credit portfolio quality on the basis of geographical and sectoral distribution. It is no longer enough to focus solely on activities in Iceland, because threequarters of the banks’ total lending on a consolidated basis was to non-residents, especially in the other Nordic countries and the UK. The assessment indicates that the banks’ loss provisioning is more than adequate to meet expected losses. However, this view must be tempered by hefty credit growth in recent years and the large increase in leveraged buyouts and forward contracts connected with them. House prices are at a historical peak in real terms and may unwind. Equity prices reflect expectations of ongoing rapid output growth, but such sentiment can quickly reverse, as recent experience has shown. Arrears and impairment are minimal, but both may be expected to increase in the coming years. One major vulnerability of the Icelandic economy at present is the risk of a rapid and unforeseen rise in international interest rates and premia. Short-term rates have already risen widely and may go up further. Long-term rates have not changed much but could begin to climb. Premia are prone to change at short notice due to shifts in investors’ risk assessments or risk-seeking. The Icelandic economy has never been so sensitive to changes in global markets, which could significantly affect it.
Before they do so, a good leader assesses the context in which their organisation operates. That process starts with discussions with all stakeholders, including clients, senior managers and, via roundtables and surveys, colleagues at all levels. Understanding context requires developing intuitions about global developments and shifting technologies. This has always been second nature to central banking, but there are few organisations today that are not affected by the mega trends of shifting demographics, the accelerating pace of technological disruption and the search for a more inclusive capitalism. When setting priorities, time is of the essence because of both the rapid pace of global change and the arc of a leader’s personal capital within their organisation. As the global head of McKinsey Dominic Barton observes, “Great leaders set a clear agenda early on and then act on it fast. They never have as much power or impact as when they first take on the role.”  5  4  This is part of the Bank’s Vision 2020 Strategic Plan launched in 2017, which aims to overhaul ‘how we work’ and ‘how we communicate’. See: https://www.bankofengland.co.uk/about/governance-and-funding 5 Barton, D (2017) p. 3 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  The third thing leaders do is to catalyse action. Specific catalysts vary with an organisation’s structure and culture, but in all cases they require the full and visible commitment of the leader before devolving power to colleagues.

On this basis, it can decide to transfer to direct supervision any bank or group of banks that may be considered relevant or the origin of systemic risk. This incorporates the lesson of the crisis that not only big banks can be the source of general financial instability. The SSM’s micro-prudential role will also be complemented by extensive macro-prudential powers. Unifying micro- and macro-prudential powers within the central bank aligns practice in the euro area with that in most other advanced economies. The Bank of England, for instance, will have the Prudential Regulation Authority for micro- and the Financial Policy Committee for macro-prudential issues. And there are in fact additional reasons for doing this in a multi-country monetary union like the euro area, as the level of the main interest rate may not be appropriate for all countries at all times, meaning macro-prudential tools play an important role as a “counter-weight”. A final point to note about the SSM, according to its Regulation, is that its launch will be associated with a comprehensive review of participating banks’ balance sheets. The objective of this review is to identify legacy problems and start with a system that avoids reputational risks for the SSM down the line. This process may have financial implications if impaired assets have to be written down. And this is a further reason why having a Single Resolution Mechanism in place for participating countries is a matter of urgency.
Other mechanisms that in certain situations can reduce the impact of monetary policy from its normal level include the banks tightening their credit standards - known as a credit crunch - because they cannot increase their credit risk exposure, for example, as a result of the capital adequacy rules. 4  BIS Review 80/2001  Following a long period of a strong expansion in credit, based on lenders' expectations of continued growth and high wealth levels, a severe downturn in the economy and falling asset prices can, for instance, lead to the banks limiting their lending due to uncertainty over the quality of their existing loan stock. With hindsight, the banks can conclude that they have probably misjudged credit risks earlier and thus lent money at an interest rate that was too low, as well as failing to reserve sufficient funds to cover future losses. Monetary policy relief can in such situations have less impact than otherwise, as the banks are not prepared to make loans even to profitable investments. To summarise, there is good reason to try to learn more about what affects monetary policy's impact, for instance, via the banks, in different situations. Developments on the financial markets over time and differences between various countries indicate that the impact on demand and inflation of a particular monetary policy measure should differ between periods and between countries.

4  BIS central bankers’ speeches  The housing bust and the onset of the recession in 2007 strained state and local government finances. Most local governments rely heavily on property tax revenue to fund their schools and other activities. This was particularly true during the first half of the decade, when the housing boom strongly supported property tax revenues. Then came the bust; steep declines in the housing market led to corresponding drops in local property tax revenue. State governments’ revenues also fell, as rising unemployment cut income tax revenue and reduced consumption shrank sales tax revenues. Since most state and local governments spend at least half of their budgets on education, these developments have constrained funding for our primary and secondary schools. To stave off drastic state and local government spending cuts, the federal government allocated $ billion to states, including New York and New Jersey, for education through the American Recovery and Reinvestment Act (ARRA). Research done here at the New York Fed reveals that school finances in both New York and New Jersey were impacted by the Great Recession, with New Jersey sustaining particularly severe cuts.4 ARRA funds helped school finances in both states, yet did not completely compensate for lost state and local revenues. With ARRA funding drying up and our local and state economies still under stress, a question looms before us. How might we expect school finances and student learning to fare in the near future?
Charles Bean: Measuring recession and recovery – an economic perspective Speech by Mr Charles Bean, Deputy Governor for Monetary Policy at the Bank of England, at the Royal Statistical Society (RSS) Statistics User Forum Conference, London, 27 October 2010. *  *  *  Good morning! It is a great pleasure to open this conference dedicated to exploring the way statistics are used in the study and control of the business cycle and, in particular, the issues thrown up by the Great Contraction of 2008–9. Before I turn to that topic, however, it might be useful if I start by saying a few words about the sort of information that the Bank of England’s Monetary Policy Committee (MPC) relies on when it sets the level of Bank Rate (or the amount of asset purchases) each month. First, and most obviously, there is the wealth of official statistics on the economy generated by the Office for National Statistics (ONS) and other national statistical agencies, covering such variables as output, employment, pay and prices. That is the absolute bedrock on which our analysis and policy rests, and without it we would struggle to do our job. But the picture they provide is rarely perfect. Series often do not quite correspond to the appropriate economic concept, either because they are conceptually difficult to measure or else because only imperfect proxies are available. As an example, take output.

But it is testimony to the strong credentials that Carney brought to these jobs: •  a solid academic grounding – with a PhD in Economics from Oxford University;  •  extensive experience in the private sector – having spent more than a decade at Goldman Sachs;  •  a background in public policy – working on a variety of economic issues at the Canadian Department of Finance; and  •  most important, a commitment to serve the larger good of society. •  Carney’s topic today is The Future of Financial Reform. He is uniquely well placed to talk about this, having lived and breathed financial reforms in the aftermath of the Crisis, especially as the Chairman of the Financial Stability Board. •  Under Carney’s leadership, the FSB has worked intensely to correct the fault lines that led to the Global Financial Crisis. •  The FSB, in partnership with various standard setting bodies, has presided over perhaps one of the boldest and most far-reaching set of regulatory reforms in recent memory. •  We look forward to hearing from Carney the progress and implications of that work, the new risks emerging on the financial horizon, and the forward agenda of the FSB. I have had the pleasure and privilege of working with Mark at many international meetings over the last three-and-a-half years, at the BIS, the FSB, and the IMF. There are many smart central bankers on the international circuit. There are also many sharp financial regulators.
Throughout 2011, the ACP actively participated in the preparation of the transposition of the “Basel III” agreements into European law which is due to be adopted in mid-2012 and in the negotiations preparing the entry into force of “Solvency II”. At national level, the preparation of banks for the new “Basel 2.5” and “Basel III” regulations was one of the priorities of the on-site inspections and of the teams responsible for preparing authorisations for the use of internal models notably for market risk. In 2012, the ACP will continue with its work helping the market to adjust to the new regulatory frameworks, notably by putting in place, in coordination with the supervised institutions, the new procedures for prudential reporting. With regard to banks, I also see a number of areas where decisive progress is expected in 2012.

Andrew G Haldane: Why banks failed the stress test Speech by Mr Andrew G Haldane, Executive Director, Financial Stability, Bank of England, at the Marcus-Evans Conference on Stress-Testing, London, 9-10 February 2009. I would like to thank Geoff Coppins, Harry Goodacre, Nigel Jenkinson, Salina Ladha, Iman van Leyveld, Jack McKeown, Joe Noss, Adrian Penalver, Nick Vause and Matthew Willison for contributions and comments. *  *  *  By any historical standard, the financial crisis of the past 18 months has been extraordinary. Some have suggested it is the worst since the early 1970s; others, the worst since the Great Depression; others still, the worst in human history. Time will tell. Risk managers are of course known for their pessimistic streak. Back in August 2007, the Chief Financial Officer of Goldman Sachs, David Viniar, commented to the Financial Times: “We are seeing things that were 25-standard deviation moves, several days in a row” To provide some context, assuming a normal distribution, a 7.26-sigma daily loss would be expected to occur once every 13.7 billion or so years. That is roughly the estimated age of the universe. A 25-sigma event would be expected to occur once every 6 x 10124 lives of the universe. That is quite a lot of human histories. When I tried to calculate the probability of a 25-sigma event occurring on several successive days, the lights visibly dimmed over London and, in a scene reminiscent of that Little Britain sketch, the computer said “No”.
The main purpose of the target revision is to create an achievable disinflation path that can be taken as reference by economic agents and that would take us to our price stability objective in the medium term, which is inflation rate of 4 percent. As you may know, Turkey has not witnessed low single-digit inflation figures for nearly half a century. This has adversely affected the expectations for attaining the 4 percent inflation target. Furthermore, overshooting the inflation targets in 2006 and 2007, and recent supply shocks have elevated expectations even further. Hence, the new targets announced on June 3, 2008 aim to create a new anchor for economic agents, that is attainable. At this point, I would like to emphasize that the nature of these new targets differ remarkably from those set for the 2006-2008 period. The Central Bank will treat the revised targets asymmetrically. In this framework, in the upcoming period, the Central Bank will prefer an inflation that stays below targets. Accordingly, better than expected outcomes in food and energy prices or in other global factors will be perceived as an opportunity to bring down inflation faster than that is implied by the revised target path. Should the upside risks materialize; monetary policy will be conducted so as to minimize any upside deviation of inflation from the revised targets. Target revision is the solution that is provided by our Bank to the “problem of demarcation”, which is faced by almost all central banks today.

Some advanced economies are on the brink of recession. Dear Guests, This is not the first time the world had experienced supply shocks in commodities. But, these shocks were usually in energy prices and consequently, they had affected advanced economies more severely than the developing ones. The rise in food prices, on the other hand, has led to different repercussions. In comparison to the industrialized world, food expenditures in developing countries constitute a larger share in the basket of consumer prices. That is why increases in food prices typically lead to higher increases in the inflation rates of developing countries. Food prices have been rising dramatically, particularly since mid-2007. At one point, the inflation of wheat prices reached triple digits. Similar levels were observed in corn, soybean, and rice prices. According to estimates of the International Monetary Fund, food inflation accounted for 44 percent of global inflation in 2007 – up from 27 percent in 2006. In Asian countries, this figure reaches to 68 percent. Food inflation is expected to contribute almost two thirds of increase in inflation rates in Brazil, Chile and Argentina. Despite some relief in the most recent period, they are expected to stay elevated in the near future. There are both supply and demand pressures behind this dramatic surge in food prices. On the supply side the amount of resources allocated for agricultural production has been stagnant for a while due to rapid urbanization and industrialization.
This development promised a higher sustainable rate of growth in the US economy and higher corporate earnings growth. That expectation contributed to a rapid rise in equity prices, especially in the "high tech" sectors, which in turn helped stimulate both business investment in the US and consumer demand causing the private sector to move into financial deficit. It also attracted massive direct and portfolio investment inflows from abroad which over-financed an increasing current account deficit in the US and caused the dollar to strengthen against other currencies. By the first half of last year the US economy was expanding at a rate of over 5%, which even on the most optimistic view of underlying productivity growth was clearly unsustainable. The pace of demand growth in the US needed to slowdown – as of course it has. The big questions now are about the extent of the slowdown and how long it will last. And the reality is that no one can be confident that they know the answers. What we do know is that the US data on the whole have not so far been as weak as many commentators predicted. Consumer spending in particular has held up reasonably well, though there has been a fall-off in investment growth, as well as a sharp downwards stocks adjustment and an associated decline in US imports.

There is a parallel presumption in favour of freedom of capital movements, and much greater openness around the world to foreign investment. BIS Review 47/2001  1  Among other things on the supply-side, there is a shared emphasis on the need to direct public spending to developing human resources through education and training, to effective health care, and affordable social safety nets. There has been a global trend to privatisation through which governments have increasingly returned essentially commercial activities, in which they have no necessary comparative advantage, to market disciplines. And there is a common recognition of the need for reforms in labour and product markets designed to remove unnecessary regulation, and to reduce distortions, which impede the efficient allocation of resources. But broad agreement on the principles, does not make them any easier to apply in practice. This is evident from the imbalances which have built up within and between the major industrial countries in recent years. It is uncertainty as to how those imbalances are likely to be corrected that underlies much of the current concern about the prospects for the global economy. The major uncertainty relates to the situation in the United States which has experienced a period of exceptionally strong economic growth with relatively low inflation until quite recently. Briefly – and no doubt oversimply – this very strong performance is widely seen as driven largely by exceptional productivity gains, as the application of new information and communications technologies spread through the economy.
In these circumstances, the counterpart of capital inflows is an increase in the current account deficit. If this phenomenon does not occur facing an abrupt capital inflow increase, it means that capitals are flowing out as well. It is less than evident that, from a mere macroeconomic consistency perspective, gross capital inflows or outflows cause severe disruptions. If in the short run, because of frictions in financial markets, momentary illiquidity or portfolio effects, simultaneous inflows and outflows stress the markets, they could be dealt by using liquidity providing instruments that are regularly used by central banks. This discussion centers around the main macroeconomic impacts, with a special emphasis on inflation, output, and the exchange rate. However, it is worth noting that, from a financial stability perspective, monitoring requires also paying attention to other effects caused by capital flows. Accordingly, important areas to monitor, aside from the behavior of the current account and its counter-entry in the capital account, are asset prices and the evolution of global credit. Also important is using macro-prudential measures to complement monetary policies. In any case, the current scenario differs distinctively from other periods of booming capital inflows to emerging economies. For example, in the early 1980s there were massive net capital inflows to Latin American countries (figure 7). When it reversed, because of an increase in interest rates in the United States, the debt crisis burst and a period of no capital flows to the region started.

Jean-Pierre Roth: The current economic and monetary policy situation Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Centro di Studi Bancari, Vezia, 17 September 2007. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  It is difficult to determine to what extent the turmoil in the US sub-prime mortgage market impacts on the real economy. It has hit Switzerland at a time when our economy is in enviably good shape. Should the situation in the financial markets not deteriorate any further, it is hard to imagine these factors abruptly slowing economic growth. With its decision to let the Libor slide back towards 2.75% in the short term, the SNB has clearly signalled to the markets an easing of the situation. In Switzerland, price stability has been maintained for the past 13 years, economic growth is significantly higher than in the 1990s and our unemployment rate is the lowest of all industrialised countries. It is our goal to preserve this favourable situation. BIS Review 102/2007  1