samchain/econo-pairs-v1 huggingface dataset:
Let me put it differently: is potential growth in those economies being affected by the fact that one part of the world, with nearly two-thirds of its population, is growing on average by 6–7% (or more) per year? If so, in what ways? One hypothesis which we may want to assess and test is that the so-called “long term equilibrium” variables which are so important in our economic models are in fact affected by globalisation, as advanced economies are becoming smaller and smaller. Not taking this into account may induce policy-makers to misjudge the situation and cause international surveillance to fail. These are clearly very difficult issues to examine. However, it seems to me that the analysis so far is insufficient. I won’t go into detail but would just like to pose some questions. Growth The first issue, or question, I would like to raise is whether the increase in growth rates in EMEs has had, and will have, a negative or a positive impact on trend growth in advanced economies. Taking a standard neo-classical trade model, the answer depends on various assumptions. The prevailing consensus is that globalisation provides opportunities for all, including advanced economies; their growth will not necessarily suffer. This is the conventional wisdom.

The textbooks which most of us studied depicted a world economy different from the one we are confronted with today and certainly different from the one which will take shape in the coming years. That environment was characterised by one large economy, which set the reference interest rate, and by many small ones. What used to be the leading economies are getting smaller and smaller, while others are growing fast and becoming systemically relevant. The imbalances are the result of both sides not fully recognising these opposite developments and acting as if the old paradigm was still valid. What is required are not changes at the margin, but a global framework that can encompass the unprecedented changes which are taking place. Otherwise our analysis will fall short, our surveillance will remain weak, and the policy mistakes may become more frequent, and more costly. Thank you for your attention. Chart 1: Real GDP in selected countries and regions  Note: Annual; 1992 = 100. Data based on IMF WEO October 2010 database. Grey shaded area indicates the evolution based on the IMF October 2010 WEO projections up to 2015. Sources: IMF WEO and ECB staff calculations. 6  BIS central bankers’ speeches  Chart 2: Real GDP per capita in selected countries and regions  Note: Annual; 1992 = 100. Data shown is calculated on the basis of 2000 constant US dollar series. Sources: World Bank Development Indicators Database, Haver Analytics and ECB staff calculations.
Barbro Wickman-Parak: Inflation targeting and the financial crisis Speech by Ms Barbro Wickman-Parak, Deputy Governor of the Sveriges Riksbank, at LO (the Swedish Trade Union Confederation), Stockholm, 9 January 2009. *  *  *  It is usual at the beginning of a new year to look back over the past year. If we look back at economic developments during 2008, it would be an understatement to say that it was an eventful year. First we had soaring oil and other commodity prices, combined with rising cost pressures and ever declining economic activity abroad. At this point concern was expressed in the international debate that the economies could suffer stagflation, that is, a combination of rising inflation and an economic downturn. The anxiety about stagflation soon faded. When the crisis in the financial markets suddenly intensified in the wake of the Lehman Brothers bankruptcy and economic activity deteriorated substantially in most parts of the world, a new theme for the debate arose; deflation. It is no surprise that situations like the present one cause people to wonder whether the monetary policy system is really strong enough to withstand these conditions, too. Let me first say that it is important to discuss this; new experiences and knowledge change the conditions for monetary policy. These things are not carved in stone!

Clarity and openness were guiding principles for the inflation-targeting regime right from the start, and I believe that this has played an important part in building up confidence in the inflation target. This culture has therefore continued to permeate the Riksbank’s activities. It is also important so that the Riksdag, which is our principal, can evaluate the Bank and require accountability from us. This motive became particularly important when the new wording of the Sveriges Riksbank Act gave the Riksbank an Executive Board with an independent position in 1999. Why 2 per cent? The new wording of the Sveriges Riksbank Act applying from 1999 changed the objective for the Riksbank’s activities to maintaining price stability. The previous Act contained a more general formulation that the Riksbank was responsible for “foreign exchange and credit policies”. When the new wording was produced, it was pointed out in the preliminary work that in principle the Act could be very detailed with regard to the target for inflation and so on. But the legislators judged that this type of precision would not be sufficiently flexible and allow the Riksbank enough scope to adjust the target to different circumstances. This raises the question of what price stability actually is and of whether 2 per cent inflation is the best target for the Riksbank. If one turns to academic literature on this subject, one will not find any clear answers. Everyone agrees that high inflation is detrimental to the economy.
Here in Morocco, we have just completed our national strategy for financial inclusion, which will be discussed in the appropriate panel. As for regulation, we are now called to leave room for creativity and Fintech development, but at the same time, preserve and strengthen resilience of our financial systems, and protect consumers and enterprises, particularly smaller ones. To guarantee such a difficult equilibrium, risks shall be identified and classified, and the potential impacts of innovation and of the new financial activities shall be foreseen. Sometimes, central banks are required to resort to interim solutions in the absence of statutory powers, as is the case for crypto-assets. In fact, to deal with this issue, which arose in Morocco in 2017, we chose to approach it from the consumer protection angle to attract attention to the risks involved. Still, it should be made clear that we have not taken a final position on the issue. Moreover, as enterprises, we are also called to adapt ourselves to this digital transformation, starting with strengthening the capacity of our human resources in this field and reinforcing our infrastructures, mainly the information systems whose resilience to cyber criminality has become a daily concern. 9  In this regard, and as part of our 2019-2023 strategic plan, we conducted a thorough reflection in Bank Al-Maghrib and have just drawn up a roadmap for our own digital transformation.

In particular, I would like to thank Alejandro Jara, Markus Kirchner, Andrés Fernández, Victoria Nuguer, and Liliana Rojas-Suarez for setting up the agenda, and to Tomás Gómez, Paloma Navarro and María José Reyes for the excellent organization of the event. I wish everyone a very fruitful discussion and a pleasant stay in Santiago. ***  References Espinosa, C. and J. Fernández (2015). “Comparación Histórica de Resultados en el Sector Corporativo en Chile”. Economía Chilena, Vol. 18, No. 1. Agosin, M., G. Crespi, and L. Letelier (1999). "Explanations for the Increase in Saving in Chile", in C. Reinhart (ed. ), Accounting for Saving – Financial Liberalization, Capital Flows and Growth in Latin America and Europe, Inter-American Development Bank, Washington, D. C.  Page 5 of 5
In principle, the question is whether and to what extent automatic balancing mechanisms should be invoked on the EU general fiscal stance level and be targeted at the smoothing of regional disparities with automatic income transfers from the wealthy to the less-wealthy regions - thus, in fact, compensating for the lack of the exchange rate mechanism within the single currency regime. Also in recent months the question has been raised whether or not the requirements of the Stability and Growth Pact are too rigid. By way of general comment, I should say that there are sufficiently many examples of great disparities between different regions of a federal state. Regional policy is crucial also for states with high labour mobility. Ultimately, the success of regional economies depends primarily on the efficient resource management and extensive income transfers can even slow down the adjustment process. In my view it is obvious that as long as the European Union remains to be the alliance of independent member states, there will be neither need nor possibility for any additional communitisation. Exceptions could include precisely defined circumstances when an intervention on the EU level would be justified in order to ensure the uninterrupted functioning of the internal market. Harmonisation of the fiscal policy on the macro level would be automatically accompanied with the tax rate equalisation. At that, taxation policies of any given member state reflect principal choices of their internal policy and preferences of the entire society.

Market Functioning Speech given by Chris Salmon, Executive Director, Markets, Bank of England  OMFIF City Lecture, London Tuesday 24 January 2017  I am grateful to Charlotte Barton, Nick Butt, Liam Crowley-Reidy, Nick Govier, Tom Horn, Rebecca Jackson, Sarah John and Nick Mclaren for their assistance in preparing this speech. 1  All speeches are available online at www.bankofengland.co.uk/speeches  Introduction  It is a pleasure to be here this evening. The economic and political events of the past twelve months raise many questions. From my vantage point as the head of the Bank of England’s Markets Directorate, they reemphasise the need for central banks to understand the structure and functioning of core financial markets. That matters both for our role as guardians of financial stability, and to ensure the effectiveness of our own operations to implement monetary policy. Let me illustrate this with reference to developments in two very different markets. i)  The first – the sterling FX market – a large, global, highly liquid, and almost continuously traded, market, with a constantly evolving structure. Here, the challenge is to understand how those developments affect the functioning of the market. My focus will be on the lessons about market functioning from two particular episodes last year: the period immediately following the EU referendum and its ‘flash crash’ a few months later. ii)  The second market – the sterling corporate bond market – is small, local, and thinly traded, with heterogeneous underlying assets.
In this context, one possibility would be for the central bank to not only to determine the policy rate but also to determine the time-varying regulation, while the implementation of non-time variable regulation would be the responsibility of the supervisory authority. Does it make sense to merge the central bank with the supervisory agency? Obviously, the financial-stability analysis, and to some extent also the monetary-policy analysis, must be informed by the micro-prudential analysis, and vice versa. Countries have chosen different approaches to this, often based on country-specific characteristics such as legislation or even tradition. I am open and do not believe in a one-size-fits-all solution. The important aspects are that you ensure an open exchange of information and close cooperation between the functions, as well as adequate resources. On governance we must also take into account what is called “political economics”. The most efficient theoretical solution may not be achieved if it contradicts interests of power and influence. How should we structure the decision-making process in order to take account of the nexus between monetary policy and financial stability? Central banks have adopted different approaches: Some have a separate Board for monetary policy, others also have a separate Board for financial stability. Most central banks have the same Board for both, but may have separate Deputy Governors responsible for each of the two strands. What matters, as I see it, is that “the buck stops somewhere”.

Interest rate signals from the central banks were sometimes dwarfed by contradictory events in the markets. Conversely, financial stability is dependent on a smooth and predictable monetary policy. Hence, in the long run, the interests of monetary policy and financial stability coincide. However, in the short term we may need new tools, which are better focussed on the specific situation. To sum up: Central banks need to adapt their work processes, organisation and governance to achieve an optimal balance between monetary policy, financial stability and microprudential goals. There is not yet any internationally-agreed best practice on these issues but the debate is vivid. Everybody realises that these issues must be solved before there is another system-wide crisis. External evaluation also of financial stability work Before ending, I would like to mention the present external analysis of the Riksbank on the lessons from the financial crisis in relation to our monetary policy and financial stability work. This will reveal if we are – indeed – a useful central bank. BIS central bankers’ speeches  7  Each year, since the Riksbank was granted autonomous status in 1999, the Committee on Finance has carried out its own evaluation of monetary policy. In 2006, the Committee commissioned an external independent evaluation of Swedish monetary policy covering the period 2000–2005. In 2007, a year after the first external independent evaluation was published, the Committee on Finance decided to repeat this exercise every four years.
Nevertheless, these regulations do not apply to all participants in U.S. money markets. Paul Tucker’s presentation will discuss a number of the broader costs and benefits of such potential flexibility for the role of central banks in democratic societies. Another important aspect of the future framework is that it should be as transparent as possible. Market participants can make better decisions if they have a clear understanding of the way the central bank operates and can anticipate its actions in a wide range of circumstances. Indeed, it is well understood that in the case of coordination failures, a commitment to maintaining liquid markets can prevent illiquidity from occurring, in some case without even having to intervene. For example, during the crisis, some money market participants did “hoard” liquidity and refuse to lend to other institutions because they were concerned that they might need the liquidity for themselves. This behavior led to a situation where liquidity was in short supply because all market participants expected it to be. 9 A central bank can help create conditions where market participants contribute to market liquidity because they believe that market will remain liquid.

Very early on, the National Bank realised that it could defend its autonomy and strengthen confidence in the Swiss franc by adopting rules of conduct. From the start, it strove to adhere to the rules of the gold standard and maintained this policy until the system of fixed exchange rates collapsed in 1973. With the Swiss franc losing its traditional anchor, the SNB was forced to adopt new rules. This was achieved 18 months later with the publication of annual growth targets for the money supply, a strategy which was pursued until 1999. Since 2000, our interest rate decisions have been based on our medium-term inflation forecast and our definition of price stability, which we consider achieved if annual inflation remains below 2%. The second constant in the National Bank’s activity over the past 100 years has been its adherence to the rules of monetary discipline. This strategy has allowed us, as it did our predecessors, to conduct a coherent monetary policy over all these years while shielding our institution from all kinds of demands, both economic and political. 2  BIS Review 71/2007  Willingness to adapt Given the strong disruptions in the international environment in the past 100 years, pursuing a policy of stability and applying the rules of monetary discipline has not been an easy undertaking. Let us not forget the obstacles we encountered in adhering to the rules of the gold standard and the fixed exchange rate system in times of war or during major international upheavals.
The comparison of the pre-Covid decade outside London with the decade that preceded it, is I think a helpful illustration of the impact, when supply elasticity is low, on inter and perhaps intra generational equity that can result from a highly active market in which prices consistently grow faster than incomes. As I highlighted at the outset of this speech, over the past year the UK housing market has returned to prefinancial crisis levels of activity and rates of price growth. Public and banking sector support has played a huge part in this. Furlough schemes and interest payment holidays have limited distressed sales through the Covid crisis, which would otherwise have pushed down on house prices. In addition, a combination of pent up demand from the initial lockdown in which the UK housing market was closed and the substantial tax incentive provided by the stamp duty holiday - which was announced in July 13  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  13  and which will be tapered out over the course of this year – has fuelled the strength in demand for housing. After an initial tightening, credit conditions have dropped back broadly to pre-Covid levels. One would expect the market to cool down when public support to the economy in general and the housing market in particular is withdrawn over the course of the year, as is currently planned.

Consider this graph:  Over the past six years, the monetary base has increased 340 percent, 10 times the rate at which the economy would have expanded in nominal terms had we not suffered the recent recession. One is hard pressed to argue that there is much efficacy derived from additional expansion of the Fed’s balance sheet. This is why I’ve been such a strong proponent of dialing back our large-scale asset purchases. It is my firm belief that the fault in our economy lies not in monetary policy but in a feckless federal government that simply cannot get its fiscal and regulatory policy geared so as to encourage business to take the copious amount of money we at the Fed have created and put it to work creating jobs and growing our economy. Fiscal policy is not only “not an ally of U.S. growth,” it is its enemy. If the fiscal and regulatory authorities that you elect and put into office to craft taxes, spending and regulations do not focus their efforts on providing incentives for businesses to expand job-creating capital investment rather than bicker with each other for partisan purposes, our economy will continue to fall short and the middleincome worker will continue being victimized, no matter how much money the Fed prints. I don’t want to ruin your evening after such a pleasant dinner.
The latest (2004) estimate is that growth was actually 4% a long way above trend. As Robin Leigh-Pemberton, then Governor of the Bank of England, said “we put the brakes on when the speedometer indicated we were doing 60mph. Some time later it was revealed we were doing 55. When the tachograph was opened, however, it revealed that we had actually been doing 70, when the speedometer read 60… more brake pressure was therefore entirely appropriate.” This episode marked a low point for the UK’s GDP statistics in recent times. Since then, a number of methodological changes have been introduced, and data sources have been improved. Analysis both by the ONS and the Statistics Commission indicates a dramatic reduction in the average size of revisions over the past fifteen years. Even so, measuring the economy remains a complex task, and data uncertainty is a fact of life. So what does the MPC do to ensure its judgements are as firmly grounded in reality as possible? We have a four pronged approach: •  We monitor a very wide range of data  •  We pay careful attention to data quality  •  We talk to business people around the country  BIS Review 71/2004  3  •  We are working closely with ONS to transform the quality of official statistics  Monitoring a wide array of indicators First, we critically review an enormous quantity of data.

Those with long memories know we have achieved low inflation and steady growth before - though never for so long - only to see them slip away. They ask: what’s to prevent that happening again? A lot has changed in the past fifteen years. We now have an approach to setting interest rates which provides much better incentives for policy makers to take the right decisions. This - and the strong track record built up over the past decade - has stabilised expectations, with the result that it takes more to throw inflation off course. This is crucial insurance against the risks of a more turbulent decade ahead. A trickier issue - and one on which I want to spend some time tonight - is the vexed question of information. Statisticians get an even worse press than economists. But they are indispensable. Just as well run businesses need good management information, so successful monetary policy depends on having good information about the economy. The statistical fog surrounding the true state of the economy has proved a particularly potent breeding ground for policy errors in the past. Are we yet in sight of a clearer view? The policy framework But let me start first with the policy framework: what grounds are there for being confident that it provides the right incentives for policy makers to take good decisions?