samchain/econo-pairs-v1 huggingface dataset:
2  Lawrence H. Summers, “U.S. Economic Prospects: Secular Stagnation, Hysteresis, and the Zero Lower Bound,” Business Economics, Vol. 49, No. 2, 2014; Coen Teulings and Richard Baldwin, Secular Stagnation: Facts, Causes and Cures, A VoxEu.org Book, CEPR Press, 2014. 3  Lant Pritchett and Lawrence H. Summers, “Asiaphoria Meets Regression to the Mean,” NBER Working Paper 20573, 2014. BIS central bankers’ speeches  1  The second stylized fact is the large degree of heterogeneity, or diversity in plain English, in the level of per capita GDP. As illustrated in Chart 2, the Asian NIEs (Hong Kong SAR, Singapore, Taiwan and Korea) and Japan enjoy very high levels of income, whereas most Asian countries – and in fact most of the population of Asia – belong to the middle-income group. 4 Even within the middle-income group, individual countries differ considerably in their levels of per capita GDP. Economists studying economic growth rely primarily on estimates of GDP, but they sometimes check these statistics against data from other sources. One simple and visually impressive yardstick of economic prosperity is the amount of artificial light that can be seen at night from space. 5 Chart 3 shows such an image for Asia. This not only confirms the aforementioned heterogeneity across Asian countries, but also shows the heterogeneity within a country. For instance, coastal China is as bright as Korea and Japan, but light becomes sparse as you move inland.

Population aging implies a continued decline in the proportion of the working-age population, which in turn poses a challenge to sustaining per-capita income growth, as a given income earner has to transfer a larger share of his or her income to the retirees. Chart 5 shows how diverse the region is in this context, with some countries already facing serious challenges. In this chart, the horizontal axis is changes in working-age population, and the vertical axis is the proportion of the working-age population to the total population. A rise in this proportion is often called a “demographic bonus,” while the opposite is called a “demographic onus.” And the size of the bubble is proportional to the absolute number of the working-age population. As you can see, over such a long period of time, even glacial demographic changes seem dramatic. Japan has already entered deep into the period of demographic onus, with the absolute number of the working-age population declining at a significant pace. The NIEs, China and some ASEAN countries are about to follow Japan in this regard in the not-sodistant future. Meanwhile, India and other Asian countries are expected to enjoy a favorable demographic environment at least until the middle of this century. The third challenge is what I call the “Malthusian trap.” In Malthus’ original work, the existence of a limited resource – land in his case – constrains growth. Likewise, limitations in the supply of natural resources, such as oil, are thought to threaten global growth in the longrun.
According to the most common measurement methods, Sweden has the highest incidence of sick leave in the EU. There has also been an increase in work absence due to holiday and other leaves of absence as well as a decrease in overtime and additional working hours. Meanwhile, the labour market has not made satisfactory use of the immigrant population in Sweden. The employment rate among this group has been markedly lower than among native Swedes. In addition, according to Statistics Sweden, population growth in the years ahead will be less favourable from a labour force perspective than it has been up to now. The number of people of working age will indeed continue to rise but by an increasingly smaller amount. This is because the number of people entering retirement in the years ahead will rise sharply. In particular, large numbers of the 1940s generation will start to retire in a few years. This could have a negative impact on potential growth. Over the coming 10-year period, the number of people over 65 years of age is estimated to rise by 270 000 - some 1.6 per cent per year on average. Between 2012 and 2030, this group will increase by around 1.3 per cent per year. The number of people of working age is forecast to rise by 170 000 over the coming 10-year period, i.e. by only approximately 0.3 per cent per year.

The experiences from the beginning of the 1970s and 20 years thereafter indicate that high inflation, devaluations that fuelled economic growth followed by austerity measures to prevent overheating, entailed weak productivity growth and a drop in the standard of living compared with other industrialised nations. The Riksbank can help to create a favourable environment for rapid economic growth but the growth itself must come from other sources than monetary policy. Nevertheless, the Riksbank has every reason to take an interest in these sources of economic growth since fast growth facilitates the Riksbank’s task. This task involves tightening or easing monetary policy to regulate demand, so that it keeps even pace with our country’s growth capacity. In that way inflation is stabilised. A higher potential rate of growth allows scope for higher aggregate demand without giving rise to inflationary pressures. Long-term growth and demand The Riksbank distinguishes between two concepts of growth: potential growth and demand-driven growth. Potential growth is the rate of growth that is sustainable in the long term, taking account of resource growth in the economy and how effectively these resources are employed. Thus, you could say that potential growth is determined by a combination of labour force growth, investment activity and scientific and technological progress. The latter determines how efficiently the labour force and capital can be utilised. None of these fundamental factors can be influenced by the Riksbank other than temporarily. The Riksbank’s work is, however, affected by potential growth.
Contingent capital An ideal capital requirement regime should be efficient and should create the proper incentives for banking organizations to internalize the costs of their actions on the broader financial system and macroeconomy. Efficiency, which I’ll define here as minimizing the amount and cost of capital needed to ensure solvency under adverse conditions, is important because an inefficient system will inevitably encourage growth in activity outside the regulatory regime, and will likely drive up the overall cost of intermediation. Proper incentives are needed to control risk and better align the interests of management and shareholders with those of the public. In both respects, the introduction of a contingent capital instrument seems likely to hold real promise. Relative to simply raising capital requirements, contingent capital has the potential to be more efficient because the capital arrives as equity only in the bad states of the world when it is needed. It also has the benefit of improving incentives by creating two-way risk for bank managements and shareholders. If the bank encounters difficulties, triggering conversion, shareholders would be automatically and immediately diluted. This would create strong incentives for bank managements to manage not only for good outcomes on the upside of the boom, but also against bad outcomes on the downside. Conceptually, contingent capital instruments would be debt instruments in “good” states of the world, but would convert into common equity at pre-specified trigger levels in “bad” states of the world.

Iceland’s sovereign credit rating soared during the years before the crisis, and Icelandic banks’ credit ratings followed in its wake. In fact, perhaps they rose higher than was warranted and was good for us. In spite of the ensuing nosedive, we managed to keep the sovereign rating on the bottom rung of investment grade, apart from two years in Fitch Ratings’ speculative category after the first Icesave referendum. Keeping Iceland’s ratings in the investment-grade category cost an incredible amount of effort, and other countries that have gone on an IMF programme in recent years have seen their ratings from Moody’s and S&P fall to speculative grade. Some of them have managed to rise up faster than Iceland has, however. Studying the rating agencies’ reports shows which factors will be most important in order to improve Iceland’s sovereign rating and thereby pave the way for the banks to follow suit. Among them are continued reduction of public debt levels and sound, focused economic policy that provides stability throughout the ongoing upswing. The liberalisation of the capital controls is an extremely important factor, but it could work both ways. Successful moves towards liberalisation without jeopardising stability will have a positive effect, but disturbance of economic and financial stability will do the opposite. My assessment of this, and of conversations with the rating agencies, is that it is probably not realistic to expect an improvement in our sovereign rating in the very near term.
Andrew Bailey: A resilient financial system Speech by Mr Andrew Bailey, Governor of the Bank of England, at the TheCityUK Annual Dinner, London, 10 February 2022. * * * It’s a pleasure to be here this evening, and let’s take the fact that we are able to be here as a positive sign of things to come. Adrian, it’s timely to recall that, early on in the Covid era, you and I started to talk about the importance of ensuring that the financial system was able to support the economy through the pandemic, and about the need to mobilise to ensure that long term capital would be available for businesses as we came out of the pandemic and beyond. Those discussions formed an important input to the work of the Productive Finance Working Group, work which continues and for which I want to thank John Glen for his leading role and commitment and Nikhil Rathi too. That work is not done, but it has more momentum and substance as a consequence of our early engagement. I am going to say a few words on the subject of resilience, what it means in finance and how important it is. In March 2020, nearly two years ago, we had our initial very difficult time with some financial markets, the so-called “dash for cash” where weaknesses in the system of market based finance amplified the initial covid shock.

And absent significant intervention from authorities here and in other countries, would have risked tightening financing conditions significantly and made the impact of the pandemic much worse. Tackling the causes of that is today a major area of work both internationally and domestically. For banks, we tested rigorously to ensure safety and soundness, and particularly that banks could support the economy through these very hard times. Indeed, we tested to make sure this support could continue through even harder times, and the answer was positive. This matters greatly because having a resilient system has meant that business lending could be sustained, and mortgage servicing pauses to support households seriously affected by Covid and its economic effects were extensively available and used, all to assist with dealing with the consequences of Covid. It has been the first major test of the post-financial crisis reforms to regulatory standards. In my assessment this outcome mainly passes the test of resilience, accepting both that we have work to do on the lessons from the dash for cash, and that we can never stand still because the positive benefits of innovation also create their own challenges. But, what is meant by the idea of resilience? A resilient financial system has the resources and flexibility to respond to a range of shocks of different sorts. In doing so, it will support stronger growth over the long-run, helping the economy to bounce back and reducing long-term economic scarring caused by the shock.
Other challenges are specific to the Eurosystem, like the completion of the single market with a single currency and a successful enlargement. The people of Germany as well as all 329 million fellow citizens in the euro area, can count on the ECB and on the Eurosystem. You can count on us to continue providing a solid and reliable anchor of stability and confidence. Particularly in the current environment both these elements are essential. I thank you for your attention. 8  BIS Review 16/2009

30.08.2022  Central bank money for the digital age: reflections on the new paradigm Keynote address/ Central Bank Research Association (CEBRA) Annual Meeting Margarita Delgado Deputy Governor  It is with great pleasure that I take up the opportunity of addressing such a distinguished audience tonight with a topic that I very much feel falls within CEBRA’s remit. In that respect, given the turbulent times we are living in, leveraging a space where an open and constructive dialogue between us and the academia can take place is sure to prove even more instrumental now than it has been the case in the past. Yet, over and above the daunting challenges of inflation, climate change, macroeconomic stability and many others which you are touching upon in this year’s conference programme, in the next few minutes I would like to turn my attention on to something very different. I am talking about the so-called central bank digital currencies, one of the most prominent examples of financial innovation. Being digital is no longer a prophecy awaiting realization as Nicholas Negroponte 1 once forecasted in his now renowned examination of the frontiers of digital technology and its effects on the future of our society. Instead, it has already become an all-encompassing phenomenon which the pandemic helped expedite by a few decades. Being digital in the financial industry means new opportunities for incumbents to acquire new clients, to expand their current share of the wallet and to obtain efficiencies unheard of.
The export share of the Swiss gross national product (GNP) amounts to approximately 42%, while the corresponding share is 29% in Germany and only 12% in the United States. Switzerland's major trading partners are the EU countries, which absorb 59% of Swiss exports. With regard to imports, the interdependence is even greater: 75% of Swiss imports come from the EU. Via foreign trade, the exchange rate exerts an influence on aggregate demand and, therefore, also on the price level in Switzerland. In addition, the exchange rate directly affects import prices. Therefore, exchange rate movements have been, and will be, closely monitored by the SNB. The rapid succession of interest rate cuts by the National Bank since 11 September 2001 was also an expression of concern about an exchange rate-triggered threat to the economy. Since price stability was not jeopardised, it was possible to considerably relax monetary policy. 4.3. Steering the exchange rate? Although the SNB takes account of the exchange rates when determining its monetary policy, it is sometimes called upon to do more than that. It is even requested to concentrate – at least temporarily – exclusively on the exchange rate. The underlying notion is that the National Bank could aim at a lower Swiss franc exchange rate and that exports would consequently pick up to the desired degree. Theoretically, it is possible to weaken the franc in nominal terms by conducting a highly expansionary monetary policy.

Niklaus Blattner: The euro - implications for Switzerland and for the monetary policy of the Swiss National Bank Speech by Professor Niklaus Blattner, Member of the Governing Board of the Swiss National Bank, at the Banking Studies Center Colloquium, Lugano, 22 October 2002. * 1. *  *  Introduction  Where do we stand more than three and a half years after the launch of the European Economic and Monetary Union (EMU) and almost ten months after the introduction of euro notes and coins? On the whole, from the perspective of the Swiss National Bank (SNB), the experience with the euro has been primarily positive so far, even though the Swiss franc has somewhat appreciated against the euro since 1999. First of all, Switzerland is now surrounded by a large currency area that pursues similar goals in terms of monetary policy, and, in particular, with respect to price stability. Competitive currency devaluations are no longer an option for members of the euro area, and the exchange rate volatility of the Swiss franc vis-à-vis the currencies of the European trading partners has declined considerably. For Swiss enterprises, foreign currency management has become easier. Apart from decreasing transaction costs, Swiss firms also benefit from enhanced price transparency and competition in Euroland. At the same time and despite some initial fears to the contrary, Switzerland has been able to retain its advantage of lower interest rate levels.
The market for new dwellings was saturated. Real house prices did not revert to the 1899 level until the mid-1980s. The rise in house prices has been high in Norway in recent years, but not particularly high compared with other countries. We have limited scope for restraining structural changes that occur when households increase their debt over several years to invest in housing and other property and assets. An interest rate that would effectively restrain these structural adjustments would also have an adverse impact on economic activity. But households are more vulnerable when debt levels are high. Long periods of a sharp rise in asset prices and debt may give rise to instability in output and employment at a later stage. Debt developments also affect banks’ behaviour. A particular responsibility for monitoring developments in financial institutions has been assigned to Kredittilsynet (Financial Supervisory Authority of Norway), and we are happy to have a well-equipped supervisory authority in this field. In its forecasting of economic variables, Norges Bank uses a broad approach. Current statistics and impressions from Norges Bank regional network are important in assessing the current economic situation. In its forecasting, the Bank uses several macroeconomic models: one core model and a number of smaller models. There is, however, no mechanical relationship between the models the Bank uses and its forecasts. The Bank’s forecasts are based on a broad and varied range of information sources and include a substantial element of judgment.

Inflation is still being restrained by the fall in prices for imported consumer goods, increased competition in a number of markets and the current period of lower nominal pay increases. The trend in prices for consumer goods over the past two or three years is a result of favourable developments in the Norwegian and global economies. Low inflation is being accompanied by real income growth and a rise in production. It cannot be ruled out that small open economies are particularly vulnerable to fluctuations in international prices. Deviations from the inflation target in Norway are broadly in line with Sweden and New Zealand, but are larger than for example in the UK and Canada. Developments in recent years have also been influenced by the fairly large favourable disturbances to which the Norwegian economy has been exposed. Developments in Norway’s terms of trade provide an illustration of this here. As consumers, we enjoy the benefits of falling prices for many imported goods. As a nation, we benefit from a fall in prices for the goods we import in relation to prices for the goods we export. Norway’s terms of trade are improving. The impact of the rise in oil and gas prices is particularly strong – and the domestic economy is shielded to a certain extent through the oil fund mechanism – but there have also been terms-of-trade gains in the mainland economy. The situation in Norway differs from that of our Nordic neighbours.
The system for granting certain benefits should be reviewed to prevent abuse, especially in the case of invalidity pensions. This will also help to retain older workers in the labour market. It is furthermore essential to speed up a review of the unemployment benefit system to transform it into an effective instrument of employment creation rather than of social dependence. Finally, the range of services offered by the public health system should be critically assessed in the light of budget constraints. Beneficiaries should be required to shoulder part of the costs involved. Free medicines and free medical services induce waste and abuse. So far we have seen that outlays on wages and salaries and on social security benefits together account for fully two-thirds of government spending. A further tenth is absorbed by the interest on the public debt. Here it is well to recall that this cost is currently restrained by the prevailing low level of interest rates. With a global recovery under way, however, this favourable interest rate scenario is unlikely to last much longer. And since a one percentage point rise in the rate of interest is estimated to increase debt-servicing costs by some Lm3 million, it is clear that slowing down the pace of debt accumulation should be a priority. Any receipts from the privatisation programme should be used for this purpose.

Michael C Bonello: Fiscal reform - an imperative for sustainable growth and development Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the Institute of Financial Services Annual Dinner, St Julians, 11 November 2004. *  *  *  I should first of all like to thank you, Mr. President, for inviting me to your annual dinner and for the opportunity to share my thoughts once again with such a distinguished audience. I must also congratulate you on your recent election as President of IFS - Malta and wish you and your Committee every success in your endeavours to ensure that the Institute’s educational programmes remain relevant in today’s complex financial services environment. As you rightly pointed out in your first message to your members, in a situation which is rapidly evolving, “we must be prepared to embrace change.” I have a similar message to convey tonight. Inspired by the words of George Washington that “There is no practice more dangerous than that of borrowing money”, mine is essentially an appeal to the country to leave behind its spendthrift ways and to learn to live within its means. I shall therefore make a case for fiscal reform. Now some might wonder why a central bank governor should be so concerned about the state of the country’s public finances. Put simply, the reason is that a persistent excessive deficit situation represents a potential threat both to price and financial stability, which are key objectives of most central banks today.