samchain/econo-pairs-v1 huggingface dataset:
Chart 8: Real pay by region 1998-2007  2009-2018  Average annual real pay growth (per cent) 2.5 2 1.5 1 0.5 0 -0.5 -1 -1.5  Sources: ONS and Bank of England calculations. Notes: Data at annual frequency using median gross weekly pay in ASHE deflated by CPI. Regional calculations at NUTS1 level. Over the past decade, average growth rates of real pay in every UK region have fallen into negative territory and well below average GDP growth rates in the economy over the same period (1.3%). The worst-affected regions have been the East Midlands and London. Scunthorpe has been towards the lower end of this pack, with real pay falling by, on average, 0.8% per year over the past decade. The distribution of real pay rises across the wage distribution tells a nuanced story (Chart 9). In the decade prior to the crisis, real pay growth was fairly evenly distributed. The one exception was the top two wage deciles, where real pay growth averaged 2 ¼% – 0.5 percentage points higher than in the lower deciles. The global financial crisis (2008-11) saw a sharp and significant amplification of these pre-crisis trends. The distribution of real pay rises fell below zero for all income groups. But while for the top two income deciles real pay shrank by only 2%, for the bottom two deciles it fell by 4%. This widened pre-existing wage inequalities. For the poor, this really was a Great Recession.

Hidalgo, C and Hausmann, R (2009), ‘The building blocks of economic complexity’, Proceedings of the National Academy of Sciences of the United States of America, Vol. 106, No. 26, pp. 10570-10575. IPPR Commission on Economic Justice (2018), ‘Prosperity and Justice: A Plan for the New Economy’, Institute for Public Policy Research. Izraeli, O and Murphy, K (2003), ‘The effect of industrial diversity on state unemployment rate and per capita income’, The Annals of Regional Science, Vol. 37, No. 1, pp. 1-14. Kaplan, G, Moll, B and Violante, G (2018), ‘Monetary Policy According to HANK’, American Economic Review, Vol. 108, No. 3, pp. 697-743. Karnopp, D, Margolis, D and Rosenberg, R (1990), System Dynamics: A Unified Approach, Wiley Interscience. Krugman, P (1991), ‘Increasing Returns and Economic Geography’, Journal of Political Economy, Vol. 99, No. 3, pp. 483-499. Krugman, P and Venables, A (1996), ‘Integration, specialization, and adjustment’, European Economic Review, Vol. 40, No. 3-5, pp. 959-967. Kydland, F and Prescott, E (1982), ‘Time to Build and Aggregate Fluctuations’, Econometrica, Vol. 50, No. 6, pp. 13451370. Lorenz, E (1963), ‘Deterministic non-period flow’, Journal of the Atmospheric Sciences, Vol. 20, No. 2, pp. 130-141. McCann, P (2016), The UK Regional-National Problem: Geography, Globalisation and Governance, Routledge. Mealy, P and Coyle, D (2019), ‘Economic Complexity Analysis: A technical report for the research on Innovation & Global Competitiveness’, Greater Manchester Independent Prosperity Review, March 2019. Mealy, P, Farmer J D and Teytelboym, A (2019), ‘Interpreting economic complexity’, Science Advances, Vol. 5, No. 1.
In contrast, there is a range of other insurance contracts for which the consequences of firm failure are less severe, and hence with limited resource to spread around the PRA’s supervisory approach can be somewhat less intense. For example, there are various classes of property insurance, such as mobile phone, for which an argument could be made that the PRA should restrict itself to a lower level of supervision. Our resourcing 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  model already works to some extent in this way, but the IEO has challenged us to think more deeply about this question. Another interesting area is insurance bought by commercial or corporate customers. In these cases, the information asymmetry between buyer and seller is lower, or sometimes reversed, and contracts are typically renewable annually, meaning that there are lower concerns about customers being locked into long-term policies. In circumstances where buyers often choose their cover provider based on third-party measures of financial strength (such as opinions from rating agencies or insurance brokers), there is a case to be made that the need for the regulator is reduced. Indeed, many in the London Market have made this very point (somewhat less subtly!). But before anyone excitedly hears this as confirmation that the PRA will no longer regulate certain types of insurer, remember that we have a statutory objective to contribute to protecting policyholders of all stripes. So the debate is about ‘how’, not ‘whether’.

Although an understandable response to the events of the past few years, an increased prevalence of self-insurance is not good for the efficient functioning of our economy. The scarring effects of the financial crisis and the uncertainty it brought with it, together with the fiscal consolidation and the weakness of the euro area, are likely to continue to weigh on the recovery over the next few years. Yes: our economy appears to have turned a corner. And yes: there are good reasons for optimism that the recovery will persist. But we can’t take it for granted: there’s still a long way to go. And that sense of how far there is to go underpins the policy guidance provided by the Committee earlier this year and takes us to our third and final question: what next for monetary policy? What next for monetary policy? The primary objective of monetary policy remains to hit the Government’s 2% target for CPI inflation. Despite missing the target for much of the past five years, I’ve no doubt that the credible nominal anchor it provided served our economy well during the crisis. Indeed, without that credibility it wouldn’t have been possible to loosen monetary policy as aggressively as we did in order to support output and jobs. As we have seen, the good news is that inflation has fallen sharply over the past few months and the 2% target is now in sight for the first time in over 4 years. But this isn’t a time for complacency.
This movement has produced various results: in some places it has been reflected in increased protectionist barriers, in other places in isolationist policies, in others in repatriation of capital and refocusing of activity in home countries. The result of the 23 June referendum on the relationship between the UK and the European Union is one of them. The anti-globalist movement and barriers to the free movement of goods, people and capital appear as harmful to the overall global economy. However, their negative effects fall disproportionally on emerging countries, such as Albania, and the Western Balkans in a broader sense. Let me know outline our assessment on the potential negative implications resulting from Brexit and the relevant effects on the central banks in the region. 2. Potential implications resulting from Brexit for Albania and the region Brexit is certainly a determinant factor for the European Union and the euro area. As such, it has left its mark in Albania and the region. It may be accompanied by direct or indirect, short-term or long-term negative effects in the labour, goods and services markets. Overall, the direct implications for Albania and the region are assessed as minor ones, given that 3/4  BIS central bankers' speeches  trade exchange with the United Kingdom is low. To illustrate my point, the export of Albanian goods to the UK accounts for only 0.2% to the total over the past ten years, whereas the share of imports amounted to around 1.1%.

I will leave this for the presentation by Kate Sweetman, the main author of this study. Broadly, the Asian Leadership Index demystifies that attributes leaders in Asia must develop if they are to engage the people they lead. The Asian Leadership Index does not propose a new leadership model. Rather, it identifies a number of areas for behavioural change that are needed based on the attributes that respondents indicated are currently missing in their leaders, reinforced with suggestions on how leaders might move forward with greater influence and impact. In conducting this research, it is hoped that it generates thinking on these leadership issues and contribute towards the development of the new generation of effective leaders in Asia. BIS central bankers’ speeches  1
4  BIS Review 31/2007  Extending the New Silk Road to the world Ladies and Gentlemen, While the New Silk Road is enhancing linkages between Asia and the Middle East, both regions have always extended the Silk Road to the rest of the world to participate in the these exciting developments on this route. Indeed, global investors and the international financial community are already drawing the benefits from the increased diversification of asset classes while riding on the dynamism of the two regions. As Islamic finance expands further, reinforced by the activities on the New Silk Road, there will be greater convergence towards ethical or socially responsible-type of investments (SRI) in the global financial community. Islamic investment guidelines share significant similarities with the SRI principles. The focus of Islamic investment not only involves the avoidance of riba-free activities but also extends to include issues related to ethical values, such as fair trade and environmental protection. Furthermore, the prospects of increased stability for financing flows and the focus on the role of real sector economic activities have ignited interest in utilising Islamic finance for sustainable development. This overwhelming gathering of so many issuers and investors here today provides some indication of the growing interest in Islamic finance, reinforcing the potential increased activity on the New Silk Road. We all have a part in the making of the New Silk Road into a vibrant source of wealth and prosperity in the global economy.

With Asian official foreign currency reserves exceeding USD2 trillion, and Middle East oil revenues exceeding USD1 trillion since 2000, the management of surplus savings and reserves in both regions will offer significant investment opportunities. Besides the institutional pool of wealth, the rapidly expanding middle class in both regions is a further trend sustaining the high savings rate and the increased demand for more sophisticated including consumer finance and wealth management. In Asia alone, we now have more than 2.4 million high net worth individuals 5 , not far behind the US with 2.9 million and Europe with 2.8 million, and these Asian individuals control an estimated amount of USD7.2 trillion financial assets. The size of this group in Asia is estimated to be increasing at 7% per year, second only to those in the Middle East, numbering 300,000 and growing at 9% per year. Traditionally, investors in Asia and the Middle East have looked to the developed Western markets to meet their investment needs, in view of the more developed financial markets and the range of asset classes. Increasingly however, there is growing interest and search for improved returns on investment in other parts of the world. This has been a global phenomenon for some years now, characterised by excess liquidity and low yields in the traditional markets. The New Silk Road creates linkages that build on the comparative advantages between Asia and the Middle East Ladies and Gentlemen, Historically, trade and investment in Asia and the Middle East has been linked to the developed economies.
Typically, potential output is divided into a contribution from the stock of capital – how much physical capacity there is in the economy – and something called “total factor productivity”, or TFP. The stock of capital is much bigger than the flow of new investment that adds to it, and it therefore evolves relatively slowly. And, while TFP is a catch-all for all sorts of factors, many associate it with relatively slow-moving things like the state of technological knowledge or average educational attainment. On this basis it’s hard to see how the overall rate of potential output growth – and, a fortiori, our estimates of that trend – could change much over any short period of time. Indeed, I think we can go further than this – not only can the view that changes in supply are gradual make sense in principle, I think it’s usually true empirically as well. Over shorter-run cyclical horizons, most movements in economic growth appear driven by demand, not supply. That’s why inflation tends to be higher in upturns than downturns. But that doesn’t mean such short-term hits to productivity are inconceivable. We saw a sharp step down in productivity growth after the financial crisis. And I think there are things involved in Brexit that, once one digs below the macro-economic surface, could potentially do the same. I’m thinking in particular of allocative effects.

We may see now that in recent months the proinflationary impact of demand has become prevailing. The fundamental difference of the so-called ‘cost inflation’ from ‘demand inflation’ is how it influences the physical volumes of consumption. In case of ‘cost inflation’, that is, supply shock, prices are growing, but consumers have to buy less in response. Businesses can only partially translate their costs into prices, as demand is limited. Whereas, if both prices and sales volumes grow, and this is exactly what we are seeing now across quite a few market segments, it means that the expansion in demand is by far exceeding the impact of supply-side factors. Therefore, it means that we are facing ‘demand inflation’. Finally, elevated inflation expectations do make a considerable contribution to inflation. In anticipation of price increases, consumers are ready to start buying earlier than they previously planned. Thus, given the unanchored expectations even transitory price spikes may become more sustainable. Why is the acceleration of inflation posing a threat? It is more difficult for companies to stick to their business plans, predict financial flows, and hedge against volatility. It is the most vulnerable citizens that are hardest hit by inflation. Low-income families spend increasingly more funds on essential goods. High inflation boosts inequality, lowers social security, and undermines the financial standing of most families. That is why our main task is to stabilise price growth 2/4  BIS central bankers' speeches  as soon as possible by curbing inflation expectations and not allowing inflationary spiral to exacerbate.
To that end, regulations must seek to ensure that payment systems are secure, reliable and resilient. Given the increasingly unpredictable sources of risk, regulatory initiatives would benefit from an ‘assumed-breach’ philosophy. Systemically important payment systems must be set up to be able to withstand disruption. This would entail requiring adequate financial buffers and robust business continuity arrangements to preserve the continuity of key payment services under stressed conditions. With increasing digitalisation, cybersecurity incidences have the potential to not only cause significant business disruptions and monetary losses, but also undermine the trust and confidence in the global financial system. Due to the interconnectedness of the global economy, cyber resilience is only as good as the strength of the weakest link. It is important therefore for regulators to formulate and promote the adoption of holistic cybersecurity strategies that are constantly enhanced. This should be complemented by strong public-private collaboration at both domestic and international level to strengthen collective resilience. With payment systems becoming more efficient and interconnected, it is also important to prevent their abuse by illicit actors, such as for money-laundering and terrorism financing (ML/TF). Notably, the availability of instant payments poses challenges to traditional AML monitoring tools that operate on a batch mode, rather than on a real-time basis. Regulations should thus focus on continuous enhancement of AML controls among industry players, supported by improved AML compliance procedures and more advanced monitoring approaches.

The cure in such cases is to achieve primary surpluses in the future, and this can be done in two ways: cutting fixed expenditures or raising taxes. We know, even from our own experience in the 1990s, that this process is painful. On the other hand, there is real danger of conflict between the objectives and directions of the fiscal and monetary policies. Tightened monetary conditions and loosened fiscal conditions have contrary macroeconomic effects, at least on demand. To this we could add the significantly delayed structural reforms which could have supported the resolution of supply-related problems, but have not yet been brought into the focus of the budgeting debate. The combination of these two factors would seriously hinder the endeavours to limit and keep inflation down; and what is more, it would create conditions for return to the macroeconomic imbalances of the recent past. Such a development, inter alia, would have a strongly deleterious effect on the businesses and banks in Bulgaria. Therefore, in terms of greater predictability of the macroeconomic environment dynamics, now one of the major economic policy tasks is to try to synchronise as much as possible the monetary and fiscal conditions in Bulgaria. In the language of  2/5  BIS - Central bankers' speeches  budgeting, this means accomplishing fiscal consolidation that can be measured by a concrete number: a budget deficit not higher than 3% of GDP.
Integrating climate-related risks into micro-supervision This is an ambitious but complex task, on which progress has been made in many countries. Looking at the potential courses of action for supervisors, I believe that our main priority should be the disclosure of existing exposures in the financial sector, what I usually call “the snapshot of risks”. A number of supervisors have paved the way, including the DNB, the Bank of England/PRA and the French supervisory authority (ACPR). The ACPR published last week a second report on the exposures of French banks and insurers to climate risks. This report gives a clearer view on climate risks and opportunities: asset exposures of financial firms to physical risks remains non-material in France  thanks to investments in very low risk zones; banks’ exposures to transitionrelated risks were slightly reduced between 2015 and 2017 and now represent roughly 12% of credit risk’s exposures at default. Our supervisor also has a clearer view on the blind spots in the risk management framework, which must be addressed: executive bodies are committed to embracing further climate risks at the highest level of decision-making but the degree of implication across the French financial sector is still heterogeneous; the granularity of the analysis provided by banks and insurance companies is not sufficient. This step should be widely promoted among NGFS members, who, I believe, need to leverage best practices throughout its membership. I therefore very much welcome the supervisory handbook that will be prepared as a NGFS technical deliverable for 2019-20. b.

Integrating sustainability factors into own-portfolio management Central banks must send the right signal and lead by example in their investment and disclosure policies. The DNB has signed up to the UN Principles for Responsible Investment. Norges Bank, which manages the Norwegian sovereign wealth fund, has advocated a diversification of the portfolio and is implementing a divestment strategy dedicated to selling off some oil and gas stocks. We, at the Banque de France, adopted in March last year a Charter on Responsible Investment for the management of our own funds and our pension portfolios: this means allocating them to socially and environmentally responsible investment funds. With respect to disclosure, in March 2019 we were the first central bank to publish our climate-related risks’ exposures. We are also working to further align our reporting with a TCFD-like approach that would fit the specificities of central banks. We trust our experience will be useful to the NGFS membership in defining some best practices as far ESG investment for central banks is concerned. We can be proud of what we have achieved in 16 months, but it is “time to roll up our sleeves”: the merciless perspective of a more than 2°C world requires us to strive to do better and to do it now. Developing practical solutions now tops the agenda of the NGFS “Season 2”. II. The road ahead for central banks/supervisors and other players too a. Disclosures and taxonomies, two faces of the same coin We are currently facing a chicken and egg dilemma.
The fan chart is designed to strike the right balance between these two hazards, by giving a broad brush articulation of the distribution that the Committee judges appropriate. But there is always room for improvement. So we turn to some of the ideas we have considered for providing additional information on particular aspects of the distribution, to help deal with some of these difficulties. For example, the next chart shows how the distribution has changed since the previous forecast by placing the two distributions side by side, as in [Slide 15]. This chart shows that the most likely outcome in the dark red band has shifted down compared with the earlier forecast. But that change in the most likely outcome is not reflected to the same degree in the rest of the fan chart – and that is because there has been an offsetting upwards shift in the balance of risks. This is most clearly seen by noting how the dark line is flatter than the light one on the right hand side of the chart, and steeper than it is on the left. As we discussed earlier, the aim of MPC communication is to convey useful information about the broad distribution, without being driven to spurious accuracy. There are many ways we can do this. One idea that we are investigating is to show charts of the MPC’s view of the probability that inflation will be above the 2% target at a particular point in time. This is shown in [Slide 16].

The Bank of England could publish all of the many documents which it creates internally each month. But that would simply make it harder for the really important information to get through. Less can be more. We could have minute by minute revisions to weather forecasts or terrorism threat estimates, but that might overwhelm genuine flood or bomb warnings to which we want people to respond. 16 Second, communication can sometimes aggravate market failures. Suppose the RSPB knows a secret location where rare birds are nesting. To preserve biodiversity, there may be a great benefit to ensuring the birds can nest undisturbed. If the RSPB reveals its secret, bird watchers may converge on the location. Here, less than full transparency mitigates the problem. An example in the same spirit is whether or not use by commercial banks of the Bank of England’s lending facilities should be concealed. If use of the facility were made public,  15  For an exposition of the credibility problem in monetary policy, see Kydland and Prescott (1977); for an account of the benefits of central bank independence, see Fischer (1994). 16  This idea has received theoretical attention recently following the encouragement of Sims (2003). He sketches a model in which agents are “rationally inattentive”, focusing only on information which they diagnose makes an important contribution to minimising forecast errors.