samchain/econo-pairs-v1 huggingface dataset:
The fact that the new model makes them explicit can be intellectually helpful. But it doesn’t make it any easier to provide answers to questions about expectations and credibility. What if some agents base their decisions on simple rules of thumb? BEQM has features that allow us to accommodate such questions when we are forecasting – but in a more ad-hoc way that requires a substantial degree of judgement. We are still learning how to exploit all BEQM’s possibilities. But it clearly represents a move towards the ‘Pagan frontier’, offering a higher degree of theoretical coherence without losing empirical performance. A number of other central banks are working on similar models – the ECB, Bank of Canada, FRB, Norges Bank and Bank of Finland – as well as the IMF. The international modelling community is an exemplary forum for the exchange of ideas and experiences, and we have learnt – and will continue to learn – a lot from the experience of others. No model can do everything. All models oversimplify drastically. The trick is to identify an appropriate degree of simplification for the task in hand. So the Committee has never been prepared to rely on one model. This has led to attempts to develop a suite of models. 4  Harrison, R, Nikolov, K, Quinn, M, Ramsay, G, Scott, A and Thomas, R (2005) The Bank of England Quarterly Model. 5  For a description of the previous model, see Economic Models at the Bank of England (1999).

Rachel Lomax: Inflation targeting in practice - models, forecasts and hunches Speech by Ms Rachel Lomax, Deputy Governor of the Bank of England, to the 59th International Atlantic Economic Conference, London, 12 March 2005. I am most grateful to Jens Larsen, James Bell, Fabrizio Zampolli and Robin Windle for research support; and to Charlie Bean, Peter Andrews, Spencer Dale, Phil Evans, Laura Piscitelli and other colleagues at the Bank of England for helpful comments. *  *  *  Introduction Five and a half years ago in his Monnet lecture Charles Goodhart1 was able to talk with some confidence of the features that particularly distinguished the UK’s approach to inflation targeting. Today with over 20 countries, in every habitable continent, formally operating some variant of inflation targeting and many more adopting some parts of the framework, all actively sharing experience and best practice, I suspect that most aspects of our approach would find a counterpart somewhere else in the world. But Charles’s focus on the Monetary Policy Committee’s (MPC) personal engagement in producing a published inflation forecast still seems to me to capture the essence of the UK’s approach. Today I want to talk about the role that forecasting has come to play in helping the MPC to take and communicate its decisions. In what sense does the Committee really ‘own’ the published forecasts that go out under its name? How much use do we make of models, and what models do we use?
It is important, for example, to ensure that the budgeting margins are in fact handled so they can be used as intended. Notable progress has unquestionably been made in this field in recent years. This may be a problem in the ongoing discussion, which often seems to assume that consolidation is something that happens almost by itself. I do not believe that is so. The reason why everything has gone so well just in recent years seems to me to be that the crisis in the early 1990s is still in everyone’s minds and therefore makes a firm policy easier. Moreover, growth as well as inflation have been unexpectedly favourable for three to four years and this has consolidated budgets much sooner than had been foreseen. Looking ahead, the challenges are considerable. If the quality of publicly financed services such as school education and the health service is to be maintained at an acceptable level in the longer run, this will be rather costly. That is because productivity in activities of this type, be they produced publicly or privately, will not rise as quickly as in the production of goods. Moreover, Sweden has an ageing population. Together with any difficulties in sticking to a tax level that is internationally high, this would severely test the public finances.

Under these circumstances it will be exceedingly important to make a thorough scrutiny of the social security system’s design; this is a question that has been on something of a back burner, what with the crisis for stabilisation policy in the 1990s and the achievement of a more lasting solution to the issue of pensions. In such a discussion about social security systems that are effective and sustainable in the long term there is a place for the issue of cyclical stabilisation. Systems that are fully or partly funded, publicly or privately, can function well as stabilisers. Thus, it is mainly in this context that I would like to place the discussion that has taken place about various types of buffer fund. But the need to reform the social security system is primarily connected, not with stabilisation policy but with being able to guarantee a high quality of publicly financed services without raising the tax take. Measures for influencing the business cycle Finally there are the questions of whether a more active, discretionary fiscal policy would be advisable and whether, to function better in the future, it may need to be supported by new institutional arrangements. First, let me stress that, for reasons I mentioned earlier, I do not have much faith in fine tuning. Of course that does not rule out trying not to accentuate fluctuations as far as possible when measures are taken primarily for other reasons.
8  BIS central bankers’ speeches  Figure 1: Ongoing Weak Recovery  Figure 2: Weak Investment and Lower Productivity Growth  BIS central bankers’ speeches  9  Figure 3: Weakened Global Trade Growth  Figure 4: Indebtedness Levels of EME Government and Private Sectors  10  BIS central bankers’ speeches  Figure 5: Declined Original Sin Ratio  Figure 6: Well Capitalized EME Banking Sector  BIS central bankers’ speeches  11  Figure 7: GDP Growth Rates of EMEs and AEs and Inflation Rate in EMEs  Figure 8: Accumulated Macro-prudential Policy Space in EMEs  12  BIS central bankers’ speeches  Figure 9: Improved Economic Confidence in EMEs  Figure 10: Volatile Global Financial Markets  BIS central bankers’ speeches  13  Figure 11: Volatility in EME Financial Markets  Figure 12: GDP Growth Rates in Turkey  14  BIS central bankers’ speeches  Figure 13: Monetary Policy and Monetary Policy Conditions in Turkey  Figure 14: Differentiated Loan Growth Rates in Turkey  BIS central bankers’ speeches  15  Figure 15: Current Account Balance in Turkey  Figure 16: Worsened Inflation Expectations in Turkey  16  BIS central bankers’ speeches  Figure 17: Maturity Lengthening in External Liabilities of the Turkish Banking Sector  BIS central bankers’ speeches  17

It came care of fixing the exchange rate – first to gold under the Gold Standard and latterly in the post war period to the dollar. With the demise of the dollar standard in the early 1970s, however, the exchange rate anchor had been tossed overboard. At the Bank of England, as elsewhere, the search was on for a new nominal anchor. Into this vacuum stepped Andrew Duncan Crockett. Crockett joined the Bank in 1966 as a graduate entrant, just before the break-up of the Bretton Woods dollar standard. He set to work on the biggest problem of the day, locating a new nominal anchor. In so doing, he began working alongside another young(ish) new Bank entrant, Charles Goodhart. The result was a joint paper published in the Bank’s Quarterly Bulletin in June 1970. It was titled “The Importance of Money”.11 Re-reading it now, it was a prophetic piece of work. In the UK, it laid some of the analytical foundations for what, during the late 1970s and 1980s, became monetarism. More than that, the paper placed commercial bank money and credit at the centre of the macro-economy. It could as well have been titled “The Importance of Credit” or indeed “The Importance of Banks”. After a successful spell at the IMF, Crockett returned to the Bank of England in 1989. In 1994, he then became General Manager of the Bank for International Settlements, the central banks’ central bank. In central bank circles, change was in the air.
So far, however, estimates of the term premium have remained compressed, suggesting that the recent rise in ten-year US Treasury yields reflects, by and large, a reappraisal of the future expected path of short-term interest rates. [16] The literature points to three potential explanations as to why the impact of QT might be more muted. One is that QT is missing the signalling component of QE. [17] That is, while balance sheet expansions signal a lower-for-longer interest rate policy, balance sheet reductions may provide little, if any, information about the future path of short-term interest rates. The second reason is that the unwinding of QE is typically more gradual than the build-up in assets. [18] The third explanation is that QT often happens in an environment of improved market functioning. Indeed, one reason why QE was so effective at the outbreak of the pandemic is that it quickly improved liquidity and reduced volatility. [19] However, isolating the effect of QT is inherently difficult. Many different forces drive long-term yields. For example, purchases by non-resident investors of US Treasury securities accelerated sharply last year, likely reflecting growing interest rate differentials and the rise in uncertainty on the back of Russia’s unjustified war against Ukraine and its people (Slide 9). Foreign investors alone absorbed nearly 60% of the net supply of US Treasuries in 2022. Increased foreign demand may have offset, at least in part, the impact of the higher actual and expected bond supply from QT.

These dynamics are captured in the simple specification  where  indexes time,  are iid normal shocks and  is the indicator  function taking value 1 when and value otherwise. As reputational concerns disappear, the term goes to zero, leaving simple autoregressive dynamics. But with reputational externalities, productivity shocks become amplified by the credit cycle: a high realisation of in period could push the macro state above the risky policy threshold, at which point the dynamics of begin also to shape the real economy. The distribution of is assumed to have a higher mean and variance than to simulate the effects of the credit boom. In particular, we constrain the distribution of relative to such that expected risk-adjusted fundamentals are constant over time. 10 So we have, in effect, a regime-switching model. When banks play safe strategies, fundamentals are relatively stable. When banks risk up, they create a temporary improvement in expected fundamentals at the cost of greater volatility. This dynamic specification has some interesting properties. First, even small shocks can have disproportionately large effects on fundamentals depending on the initial conditions. In particular, if fundamentals happen to be close to the switching threshold, a further positive shock will lead all firms to coordinate on the high risk-taking strategy. That drives up both the expected value of fundamentals and its volatility. This generates a form of path dependence. Second, credit cycles are endogenous in this framework. As firms coordinate on high risk strategies, this drives up the expected value of fundamentals.
And, at the end of these remarks, I hope you will share your perspectives with me. After all, the primary purpose of my visit to China is to listen. Background on the Federal Reserve System Some of you may be familiar already with the Federal Reserve System and the New York Fed. For those of you who are not, I would like to provide some background. The central bank of the United States is known as the Federal Reserve System. There is, however, no single entity that goes by that name. The central bank comprises, instead, three key components: the Board of Governors, which is an independent government agency; twelve regional Federal Reserve Banks, which operate under the supervision of the Board of Governors; and the Federal Open Market Committee. The United States Congress ultimately oversees the 1/7  BIS central bankers' speeches  Federal Reserve System and its entities. You may be familiar with the names Janet Yellen, Ben Bernanke, and Alan Greenspan. Dr. Yellen is the chair of the Board of Governors and the Federal Open Market Committee. Her predecessors in those roles were Dr. Bernanke and Dr. Greenspan. You may also be familiar with the name Bill Dudley. He is the president and chief executive officer of the New York Fed—in other words, my boss. He visited China earlier this month.

BIS central bankers’ speeches  These inflationary pressures from the global economy are closely linked to the strong growth in Asia and other emerging markets, which is projected to continue for some time. This means we cannot simply regard them as one-off shocks which will fade away. And just as the MPC has adjusted to changes in global growth and inflation in the past, we need to be prepared to do so now – in a gradual and measured way. The argument that these recent developments in the global economy can be ignored by monetary policy because they emanate overseas is not consistent with the previous responses of the MPC to changes in the global growth and inflation climate. That includes the dramatic monetary policy relaxation in late 2008 and 2009 in response to the global recession triggered by the financial crisis. Issue 2: The role of sterling in UK monetary policy One obvious way in which a tightening in UK monetary policy might affect our exposure to imported inflationary pressures is through its impact on the value of the pound. And this is the second key area where I see my view diverging from the majority of MPC members at present. In my view, the external value of the pound is a key channel of UK monetary policy and I would have expected the policy that I have been advocating – of gradually raising interest rates – to exert some upward pressure on the value of sterling on the foreign exchanges.
Notwithstanding the measures taken for the banking system transformation till 1997, when the collapse of pyramid schemes reached the climax, the banking system was not able to operate effectively in carrying out its intermediation function. Private banks, which consisted of small foreign banks or joint-stock banks and which did not have any subsidiaries, hesitated to extend loans and were focussed on foreign exchange transactions and trade financing. The state-owned banks were engaged in domestic lending, but they operated as government agencies, with soft restrictions in funds management and failed to apply the lending practices in compliance with international standards. Also, the Central Bank’s supervisory capacities of that time  BIS Review 115/2006  1  were limited. Some data indicate that the level of non-performing loans at end of 1996 reached to 60% of the total loan portfolio. Besides the weak performance in credit intermediation, the range of services provided to the public was also limited. Many of financial activities in the economy were carried out outside the licensed financial institutions. The financial infrastructure, including the payment system of accounting and audit was also rather weak. Lack of a formal operational banking system, associated with an insufficient structure of regulations and supervision, contributed to the flourishing of pyramid schemes. The 1997 events served as an encouraging element for deeper reforms in the banking sector. The government of that time, in cooperation with the International Community and the Bank of Albania, affirmed the commitment to implementing a full program of reforms needed for the banking system.

Naturally, opinion differs on the appropriate monetary stance at any given time, as uncertainty is a permanent feature of economic life – not only uncertainty about the future, but also about the present and the recent past. 6  BIS central bankers’ speeches
India’s ascent to a formidable global ICT power has been mainly driven by economic reforms, establishment of a free market democracy, perseverance of some unbeatable private entrepreneurs and above all, continuous human capital development in engineering and electronic fields. 10 The last development came from the high educational standards maintained by a web of reputed state owned Indian Institutes of Technology (IITs) and permission given to private sector to set up higher learning institutes. This is definitely an eye opener for Sri Lanka. Even in the midst of growing evidence from India and elsewhere that privately owned institutes of higher learning could make a significant contribution to the globalization of education and training, Sri Lanka still keeps education as a closelyguarded relic in the public sector. As a result, its capacity to meet the demand for higher education is woefully low with one place being offered to satisfy about 16 aspirants. This has led aspiring youth to seek higher education in other countries at a high personal investment cost. Since every investment should yield commensurate returns, it also has compelled them to seek employment elsewhere. Whatever the intention, the closely protected public university education system has become a waste of scarce public resources, since only a fraction of the total registered students is reported to be in 11 attendance in classes. Hence, to gain reputation as a global centre of learning, it is necessary that the Sri Lanka’s university education system should undergo a complete overhaul and reform.

The importance of the services sector for both industry and agriculture can be identified by examining the full-range of modern production flows. In fact, this is something which many have tended to disregard and therefore assign a lower value to services than real productions like agriculture and industry. Such a flow which should come one stage after the other in the order given, is presented in the following tabular exposition:  Modern production flows Stage  Process  Identity  1  Basic Research  Service  2  Applied Research  Service  3  Incubation and Testing  Service  4  Commercial Development  Service  5  Planning and Financing  Service  6  Manufacturing  Industry  7  Warehousing, Transporting and Marketing  Service  8  Financing  Service  9  After-sale services and maintenance  Service  10  Continued Research and Development for Next Generation Products  Service  It is apparent that only one out of the 10 different production stages constitutes industry (or agriculture) and all others are services. If one is concerned about developing agriculture or industry, he cannot ignore all the essential service ingredients that should precede and follow the actual act of production. Since people see only the visible output, they fail to observe the full range of other services that have contributed to its creation as well as subsequent continuation.
In the immediate future, a new draft for the General Banking Law has been sent to Congress, with a focus on three areas: Corporate Governance of the regulator, Basel III capitalization rules, and Banking Resolution. Progress in these three areas is of paramount importance. In particular, a greater convergence with the international standards on banking capital requirements defined by Basel III would solve a lag that has pulled back the banking system for several years. Equally important is to strengthen the security network of the financial system by improving the mechanisms to administer banks in financial problems (bank resolution). Once this project is sent by the Executive, it is desirable for it to receive the necessary attention and be able to advance in the formalities bypassing the political processes that will characterize the last months of this year. Another much debated topic internationally are the potential effects of technological innovations in financial markets (Fin tech) 1/. These innovations have the potential to trigger major changes in the financial system, which would provide great opportunities for the agents, but would also / See paper by Carolyn Wilkins (2016), http://www.bis.org/review/r160622a.htm  1  10  threaten its stability and safety. Addressing this matter in a proper and timely manner is another challenge for financial regulators. Likewise, an area with important recent developments is the regulation of derivatives markets. This is a significant point of interaction between the stability of the financial system, monetary policy and economic growth.

Because, for the first time since launching the Small Business Credit Survey, we are able to identify and discuss the specific experiences of Latino small business owners. And that, in turn, matters as Latinos are the fastest growing demographic in our nation and Latino-owned businesses are growing in number and importance. The total Latino population in the United States was around 18 percent in 2017 and that number is expected to rise significantly in the coming decades. Amid lagging business start-up rates, immigrant and Latino business expansion has bolstered small business growth nationally, outpacing that of other demographic groups. Between 2014 and 2016, Latino-owned businesses grew by 13% compared with less than 3% for non-Latino businesses. Today, one in four new businesses is Latino owned, contributing more than $ billion in annual sales and employing millions of workers. On top of that, the Latino population is among the youngest of all demographic groups and its entrepreneurial class is equally young. In fact, nearly half of Latino owned businesses were started less than six years ago, all of which points to the continued growth and importance of this entrepreneurial sector. But why do we care about small business in the first place? Well, it’s quite simple. The Federal Reserve System, as the nation’s central bank, has important roles to play in supporting the vitality of our economy and promoting community development.