samchain/econo-pairs-v1 huggingface dataset:
After all, over the last eight decades the world has seen three major episodes, with the associated liquidity traps: the Great Depression, the Japanese experience of the 1990s, and the current crisis. By any standards, three episodes within a period of eighty years cannot be regarded as just an “anomaly” in the functioning of the economy, or as something of only minor relevance. On the other hand, the experience with non-conventional policies during the crisis offers some reassurance that the problem posed by the ZLB may in practice be manageable, and that policymakers may therefore be able, if similar circumstances were to arise again, to avoid once again the slide into deflation. In this respect, let me stress again that the ability, on the part of central banks, to provide both conventional and unconventional stimulus to the economy has been substantially enhanced by the anchoring of medium to long run inflation expectations at a level consistent with their price-stability objective. The crisis has therefore illustrated the advantage deriving from stable inflation expectations, which increase the effectiveness of monetary policy in the face of large contractionary shocks by transmitting integrally moves in nominal interest rates into moves in real interest rates. Let me now turn to a final, and separate, lesson of the crisis, pertaining to the necessity of broadening the spectrum of views available to policymakers, and more generally of being more receptive to opinions and positions outside of the “mainstream”. II.5.

On the one hand, the notion that estimating the equilibrium level of asset prices in real time is exceedingly complex is belied by the observation that central banks routinely undertake a conceptually similar estimation exercise when they compute potential output, and therefore the output gap. Since, from a strictly conceptual point of view, there is no difference between estimating the equilibrium level of GDP and the equilibrium value of the price of an asset, it logically follows that, given that central banks estimate the former, and use it as a crucial input in their monetary policy decisions, they could well do the same for the latter. In addition, academic research has questioned the notion that, if the market knew the equilibrium level of a specific asset price, this, in itself, would be sufficient to cause the bubble in that asset to disappear. The logic underlying such an assumption is that if an investor knew with certainty the correct price of an asset which was currently mispriced, or had a reasonably good estimate of such a price, he would have every incentive to take a very large bet on this price, thus “making a killing”, and in the meanwhile contributing to bringing the price back to its equilibrium value. As argued already by Keynes in the 1930’s [and more recently, among others by Shleifer and Vishny],4 this logic misses a fundamental aspect of the way markets actually work: to put it in a nutshell, you may be right for longer than you can stay solvent.
Activity in the economy will be boosted by strong growth in government spending. The projections are based on the assumption that Norges Bank’s interest rate changes will translate into lower lending rates for households and businesses. At the same time, owing to tighter credit standards in banks, monetary policy appears to be somewhat less effective than normal. Inflation is projected to fall below 2 per cent in 2010, before gradually moving up towards the target towards the end of the projection period as the output gap gradually closes. There is a risk that the structural changes brought about by the crisis may result in persistently lower productivity growth and perhaps higher unemployment. It appears that inflation will remain considerably lower in the years ahead than we expected in December. Both the objective of stabilising inflation around the target and the objective of ensuring stable developments in the real economy suggest that the interest rate should be low. Financial architecture In many countries, banks’ share of GDP has increased considerably over the past few years. This share is smaller in Norway than in other countries and, as a result, the Norwegian economy has been less exposed to the financial crisis. Although banks in Norway have not been as oversized as in many other countries, banking still contributes to fluctuations in our real economy. 4  BIS Review 42/2009  Banking is procyclical. In upturns, loan losses are low, increasing banks’ profits. Access to equity capital is ample, providing the basis for strong lending growth.

Private consumption fell markedly, the decline in housing investment accelerated and mainland business investment started to fall. The downturn in the world economy and the abnormal conditions in financial markets are expected to continue to mark the Norwegian economy ahead. Mainland GDP is projected to contract by 1 per cent between 2008 and 2009. Norwegian government finances are sound, with substantial net wealth, although the surplus will be reduced by the fall in oil prices. The automatic stabilisers in the national budget together with discretionary fiscal policy will stimulate the mainland economy by the equivalent of 5 per cent of GDP from 2008 to 2009. Fiscal policy is assumed to become less  BIS Review 42/2009  3  expansionary between 2010 and 2012. Government oil revenue spending is expected to be brought back into line with the fiscal rule when cyclical conditions eventually normalise. We assume that prospects for higher unemployment, a fall in house prices and a high level of debt will induce households to build up financial buffers and reduce debt. The saving ratio is expected to increase considerably. Net lending is projected to be positive this year after being negative since 2004. As household borrowing has been considerable in recent years, deleveraging in the household sector is important to long-term stability in the economy. The outlook ahead and monetary policy assessments Inflation will be curbed by lower capacity utilisation. The marked increase in unemployment now envisaged will result in lower pay increases this year and next.
First, the capital requirements have been raised so that internationally active banks must have common equity ratios of at least 7 percent of risk-weighted assets when the standards are fully phased in by 2019. This 7 percent standard consists of a 4.5 percent minimum plus a 2.5 percent capital conservation buffer. Banks whose capital ratios fall into the buffer range will face increasingly stringent restrictions on capital distributions such as dividends and share repurchases and discretionary bonus payments to staff. This should act as a form of “automatic stabilizer” to their capital resources and change the incentives banks face during periods of stress. Second, for many globally active banks, the amount of capital required will also rise because the amount of risk-weighted assets against which the capital ratios are calculated will increase. Explicit capital requirements for operational risk and counterparty credit risk, as well as increased requirements for certain trading activity and transactions between financial institutions should result in a significant rise in risk-weighted assets. On the quality side, capital requirements have been toughened by narrowing the definition of what can be counted toward common equity capital for regulatory capital purposes. The emphasis has been put on common equity because of the superior loss-absorbing capacity of this type of capital on a going concern basis.

The creation of such a mechanism is undoubtedly the first task awaiting the countries of the euro zone that I wished to highlight. This mechanism is pivotal insofar as the euro members share a common monetary policy regardless of their different positions in the economic cycle. Secondly, it is also essential to conclude the Banking Union, in particular by reaching an agreement to achieve a truly and fully mutualised European Deposit Guarantee Fund to guarantee financial stability and address financial fragmentation. Thirdly, it is necessary to move towards the implementation of a true European Capital Markets Union, eliminating the barriers currently in place (such as the differing insolvency regimes in each country). It is important to bear in mind that European capital markets are underdeveloped and poorly integrated when compared, for example, with those of the United States. We cannot allow ourselves to miss the “opportunity” that this crisis has offered us to internally strengthen our common European project and strongly project our values and interests to the world. It is time to take decisive steps towards greater European integration in order to reinforce the European project and play a leading role in strengthening multilateralism. It is the appropriate way to emerge stronger from this serious crisis. Only in this way will we be able to offer a brighter tomorrow for future generations.
Bandid Nijathaworn: Macroprudential policies and capital flows – managing under the new globalization Remarks by Mr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand, at the Conference on Macroprudential Policies, organised by the People’s Bank of China (PBC) and the International Monetary Fond (IMF), Shanghai, 18 October 2010. *  *  *  Thank you Chair, First, let me thank the PBC and the IMF for the invitation. It is an honour to be here, and to be given the opportunity to share my view on this panel. Given time limitations, and the fact that capital flows are important developments in the region at this time, I want to use this opportunity to discuss three issues. The first is the context of the current capital flows to Asia. The second is managing capital inflows and the role of macroprudential policies, where I will draw on Thailand’s recent experience. And the third is my view on what we need to do to deal more effectively with the capital flows challenge. At this time, capital inflows to Asian emerging markets have been large and persistent, posing challenges for policy. The first challenge involves a macroeconomic dilemma that centres around the tension between appreciation pressures, inflation development, and growth prospect. The second stems from financial stability concerns associated with potential build-ups of macroeconomic imbalance, risk of asset price bubbles, and the possibility of an abrupt reversal of inflows.

Here, the challenge lies in selecting a set of indicators that can condition a timely policy choice, given the discrete nature of the instruments. To this end, we have put in place a macro-surveillance system to  2  BIS Review 141/2010  monitor vulnerabilities in seven key areas; namely, property market, stock market, banking sector, non-financial corporate sector, household sector, government sector, and external sector. Indicators are used to evaluate the build-up of vulnerabilities and imbalances in these sectors and the need for macroprudential measures is then assessed. This ultimately boils down to a judgement call. For us, integrating macroprudential measures in the overall macroeconomic modelling exercise to ensure a consistent and timely policy outcome remains a key priority. Finally, I want to come back to the point I raised earlier about the global nature of capital flows and the national orientation of policy. This is an important point and applies both to emerging markets and advanced economies. Simply put, the current cycle of capital flows has a strong international dimension as a key driving force of capital flows is the exceptionally low interest rates in the major economies. Hence, policy response by emerging markets is made more demanding if the problems at the source remain. Therefore, given the potential destabilizing influence that capital inflows may have on emerging markets, a question that must be asked is whether there are gains to be had for the global economy as a whole in moving away from exclusively domestic-oriented policies?
Moreover, the payments occurred during a time when so many Americans are struggling to find jobs, seeing their wages reduced or watching their retirement savings plummet as a result of a crisis they had no hand in creating. This feeling of outrage underscores the urgent need to reform the system of compensation at our financial institutions to more closely align the incentives of executives, owners and taxpayers. Congress saw fit to impose appropriate compensation restrictions on recipients of Troubled Asset Relief Program (TARP) funding, and we think it is crucial for Congress and the U.S. Department of the Treasury to continue to craft effective and sensible policies in this area. 2  BIS Review 35/2009  Although oversight of TARP-related compensation matters rests with the Treasury Department, the New York Fed has played a role since September in reviewing the adequacy of AIG's corporate governance procedures. This review has helped to identify longstanding deficiencies with respect to compensation committee governance, compensation benchmarking and lack of centralized control over compensation policy. We will continue to work with our colleagues at Treasury and the independent trustees to ensure that AIG's management properly addresses these deficiencies. Ongoing involvement with AIG The total package of assistance that the Federal Reserve and Treasury Department have committed to AIG has established a more durable capital structure for the company that gives AIG greater time and flexibility to execute its asset disposition plan to repay government funds.

There are many sources of information on labor market conditions that I regularly consult. They range from very granular data that zero in on individuals’ experiences in the labor market, to indices of job openings, how many people are quitting their jobs, and labor market participation, to name a few. But it’s not just these hard numbers that matter. I also find surveys of households and businesses provide valuable and timely perspectives about economic conditions. For example, there’s a questionnaire that asks people whether jobs are “hard to get.” It’s helpful because it gives the perceptions of normal people (and not economists!) about whether there are a lot of open positions. This survey continues to report that it’s relatively easy to find work, which is a very good sign about the strength of the economy.2 Beyond the economic data and surveys, financial market indicators are a critical source of up-tothe minute information on how investors view the economy. In addition, stock prices and interest rates affect the spending decisions of households and businesses, and the value of the dollar affects demand for exports and imports, so these are important factors shaping the economy’s trajectory. More broadly, I look at a wealth of data on international financial market developments and banking conditions, which feed into my understanding of the global outlook. Finally, and perhaps least well known, I spend a great deal of time speaking with members of the public, at our Board and Advisory Group meetings, community and business leader forums, and events like today’s.
The trend of companies choosing to stay private for longer is particularly marked for technology companies. If the experience in the US is any indication, the average age of US technology companies that went public in 2014 was 11 years, up from just 4 years in 1999. We are seeing the same among Asian tech start-ups. - Alibaba stayed private for 15 years before its IPO in 2014. - Closer to home, Singapore-based Sea Ltd, Southeast Asia’s most valuable start-up, raised its first funding round in 2009 and only recently filed for an IPO after 8 years. - Razer Inc., which was founded in 2005 by a Singaporean and is now based in California, is still staying the course as a private company. Asia is experiencing a surge in PE deals in technology and internet based businesses. Such deals made up more than 45% of the region’s total PE deal value in 2016. As Asian companies become increasingly receptive to the PE value proposition, opportunities abound for institutional investors in companies along the entire growth spectrum. The PE momentum in Asia is expected to remain robust. China will continue to be a steady source of activity as it rides the retail e-commerce boom. In Southeast Asia, internet companies will require $ billion in investments over the next 10 years, according to a joint study by Google and Temasek. 4/6  BIS central bankers' speeches  The second investment theme is Asian real estate and infrastructure. Asian real estate has seen growing interest as an institutional target.

This will facilitate faster time-to-market for VC managers, and promote financing for enterprise development. We are also working with government agencies, universities and industry players to explore industry-wide talent development programmes for VC and PE managers. There is a growing suite of opportunities in bankable infrastructure projects. Investors with strong in-house infrastructure expertise can engage in direct investments in green-field projects. This can be done alongside multilaterals and commercial banks. Others can tap on established fund managers focused on Asian infrastructure. Yet another opportunity lies in project bonds. But these remain relatively nascent in Asia. 5/6  BIS central bankers' speeches  Regardless of the investment approach, project structuring is critical in bringing to fruition infrastructure projects. For investors looking towards Asian infrastructure, Singapore offers a dynamic ecosystem – with quality solutions in project advisory, project financing, and legal services, and dispute resolution. Conclusion Let me conclude. The global economy is in a better shape than it has been in a long while. Financial markets reflect this but have probably under-estimated tail risks. Reduced volatility in the markets should not beguile us into thinking there is less uncertainty out there. Some caution will not be entirely misplaced. Asia remains the biggest growth story in the world. There is still much work ahead in regional economic integration and domestic structural reform. But Asia is moving forward. And the region’s economic fundamentals remain sound. Investing in Asia is about participating in this growth story.
In a speech I delivered last year, I had shown how Malta’s competitiveness lags behind that of EU member States, mainly because of restrictive practices and other labour market inflexibilities; the maintenance of monopolistic situations in economically strategic areas such as transportation and inland freight; and insufficiencies in our educational system and innovation efforts. These conclusions have been supported by a number of studies since then and remain valid today. Problematic as it is, however, the budget deficit is by no means the only determinant of macroeconomic imbalances. Certain systems and practices which create demand without generating output have equally harmful consequences. A typical example is the welfare system. It has become so entrenched that its benefits are mistakenly considered to be immutable rights; but, as the rapidly growing welfare gap shows, it is a system which carries the seeds of its own destruction. For while the welfare state was born from the noble premise that care for the weak and the needy is the responsibility of society as a whole, in Malta the terms “weak” and “need” are defined very liberally. In so doing, we overlook the fact that generous welfare depends on two details of demography and politics: that there are enough people of working age to fund the claims of those defined as being weak and in need; and that working people are indeed willing to pay the necessary taxes. If these conditions are not met, there can be no other solution but to redesign the welfare system according to the funds available.

There haven’t been significant amendments to the Monetary Law Act in that period and our objectives still remain the same; the control of inflation, the promotion of financial stability and banking sector and financial system stability and the thrust for a broader economic development of the whole country, that in a nutshell is what our objectives are, which is very clear, its unambiguous and it has kept us on the straight and narrow path through some fairly challenging periods. I think there are very few central banks in the world that have gone through the sort of events that we have been through, most notably the bomb blast which you know affected us, the physical lives of several of our colleagues and their families and such like over the years. And that was related obviously to the civil strives that this country went through for almost thirty years. Nevertheless I think the central bank has maintained financial stability, we have kept inflation reasonably under control, and the economic development of the country has done reasonably well despite those challenges, which is in no small measure due to the efforts of successive generations of central bankers who have stuck to their principles by and large and kept the momentum of the country moving forward. So it is appropriate for us to take a moment and just accept a little bit of self-congratulation at this point of time.
In the 1960s he became the first player to earn £ per week (roughly £ in today’s terms) in the British game which was then about four times the average male wage. Top Premiership players now earn more than 200 times the average wage. What has changed is the fact that pay is now being set in a world market. We have in the Premiership as in the City some of the best paid people in an international industry which is developing rapidly. We have imported the top of the world earnings scale and at a time when the stretch at the top world wide is increasing very fast. Just as in the Premiership, the stars of the City – the people who have not just the talent but the recent experience and networks to perform at the top level today – can command a high proportion of the returns from being at the hub of the industry. The growth of hedge funds and private equity can be seen in part as a move by the small group who have sufficient expertise in new instruments and markets to take more of the returns on ownership. 5 To sum up so far, internationalisation and technology favour the clustering of financial markets in London so we should expect London to continue to prosper relative to the financial industry worldwide and to the rest of the UK economy.

The risks we face are: first that we may increase interest rates too fast or push them up too far, with an unnecessary loss of growth, and second that we may raise rates too slowly with a cost in higher inflation and potentially higher interest rates and a sharper slowdown in the end. I voted for a further increase earlier this month partly because I was not convinced that current rates would be sufficient to bring credit growth and nominal demand back to their long term sustainable path. I also felt that the impact of moving too slowly on the credibility of the regime and thus the future prospects for the economy was of greater concern, given the robust rate of growth, than an unnecessary slowdown in activity. In reviewing the position again in future months I will be watching the trends in the growth of credit and money carefully. BIS Review 73/2007  7  8  BIS Review 73/2007  BIS Review 73/2007  9  10  BIS Review 73/2007  BIS Review 73/2007  11