samchain/econo-pairs-v1 huggingface dataset:
Structural parameters As we said in September, in this Report we updated our estimation of the structural parameters used in our medium-term projections. The new estimate covers trend growth and the neutral interest rate. It is important to note that trend growth is related to the medium-term growth capacity of the economy. Therefore, when we estimate it, we refer to a long period of time, usually a decade. The Bank also constantly estimates potential growth, which is a different concept, more closely associated with the evolution of the economy's short-term productive capacity. In any case, in the medium term, the two variables —trend and potential growth— converge. We estimate that for the period 2023-2032 the trend growth of non-mining GDP will average 2.2%, following the same declining trend that we anticipated in our June 2021 estimate. At that time, we projected that trend growth would average 2.9%, although the baseline period was different: 2021-2030. The main difference with the previous projection is that in the shorter term it factored in a recovery in hours worked and labor participation rate after the Covid shock. In the current estimate, which starts in 2023, these variables have already made most of their recovery. Thus, in the next few years, they will no longer contribute as importantly to trend growth. Towards the end of the period, the convergence of hours worked to the OECD average becomes more important, which will gradually reduce the contribution of the labor factor.

Low growth in total factor productivity continues to be expected, which is supported by its consolidation of a downward trend (figure 12). Our neutral MPR estimate puts it at 3.75%, within a range between 3.5% and 4%, equivalent to a 25 basis points increase from our previous estimate. This hike is consistent with the recent reversal of neutral rates in other economies, which reversed the downward trend of global rates. 5  Our projections In the central scenario, headline inflation is projected to keep declining in the coming quarters, converging to the 3% target in the second half of 2024. Core inflation will decline somewhat more slowly, reaching 3% by the end of 2024. The trajectory we are forecasting for inflation is somewhat above our estimate in the last MP Report. By the end of this year, with the information available on 30 November, we projected annual inflation of 12.3% (12% in September). For 2023, we project headline inflation to average 6.6%, ending the year at 3.6% (6.1% and 3.3%, respectively, in September) (figure 13). This revision considers the surprise accumulated in recent months and a slower decline in the real exchange rate over the projection horizon. The real exchange rate will hover around its current levels for a few quarters, contributing to the adjustment of macro imbalances, and then will begin to decline, in line with the evolution of the economy and its fundamentals towards long-term stability. The convergence of inflation continues to rely on the economy continuing to adjust.
When we gradually raised the repo rate this year by a total of one and a quarter percentage points, it was because our inflation forecasts indicated that inflation would otherwise have been above the two per cent target at the end of the forecast period. This in turn was primarily due to economic activity developing strongly, both in Sweden and abroad. If the repo rate had not been raised to counteract this development, it would in the long term have affected capacity utilisation in the economy and pushed up inflation. Good productivity growth and low imported inflation have meant that inflationary pressures are lower than they usually are in corresponding cyclical phases, which has also enabled us to make the increases at a slow rate. I am therefore not particularly worried at present that the property market, either the commercial or the residential, will cause problems for financial stability. I can recommend to anyone interested in more in-depth information that they read the Riksbank’s Financial Stability Report, which will be published at the beginning of December. I am not particularly worried that house prices and household indebtedness have increased to such levels that a rebound would cause serious problems to the real economy and thereby affect the inflation-targeting policy. However, we are alert, as we do not wish this to happen. Thank you. BIS Review 105/2006  5  1.

Lars Nyberg: The Riksbank and the property market Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at a lunch meeting, arranged by Connect Skåne, Kristianstad, 6 November 2006. *  *  *  To begin with, I should like to thank you for the invitation to come here to Kristianstad to speak about developments in the property market. This is a subject that certainly engages people, not merely us economists but also people who are not usually interested in economics or what the Riksbank does. The main interest is probably due to a house purchase being the largest individual investment most of us make in our lives. The Riksbank’s interest in the property market is based on the two tasks we have been set by the Riksdag (the Swedish parliament). One is to ensure that inflation remains at two per cent a year, with a tolerated deviation interval of plus/minus one percentage point. The other task is to "promote a safe and efficient payment system”, as it says in the text of the law. We wish to avoid the type of catastrophe Sweden experienced during the bank crisis at the beginning of the 1990s and we usually call this safeguarding financial stability. As I shall discuss a little later, developments in the property market can be significant for both these tasks and this is the reason for our interest.
Unemployment has risen in all counties and among all occupational groups, except in primary industries. In Sør-Trøndelag unemployment was 3.7 per cent. Unemployment is highest in Oslo, Aust-Agder and Finnmark. It has increased most in Oslo and Akershus in the course of the past year. Even though unemployment in manufacturing has edged up in recent months, the increase in unemployment so far is primarily the result of restructuring and reduced activity in some service sectors. Unemployment has increased most in Eastern Norway, where there is a heavy concentration of these industries. The aviation industry is undergoing restructuring. The ICT industry has reduced activity considerably over the last year. In spite of the slight increase in unemployment, household borrowing has been high over a long period. Over the past year, growth in credit to households has stood at over 11 per cent. House prices remain high. Household financial saving (net lending) has dropped to almost zero in the past couple of years. Strong growth in household consumption will exert continued pressures on prices and wages. There are clear indications that household income is rising substantially. At the same time, the level of financial saving appears to be low. All in all, this suggests that growth in household demand for goods  BIS Review 65/2002  1  and services will remain high. There will probably be a shift in demand towards imported goods and services.

Jean-Claude Trichet: Global capital – surrender of national policies? Lessons from the recent events in credit markets Speech by Mr Jean-Claude Trichet, President of the European Central Bank, at the 17th Frankfurt European Banking Congress “Global Capital – Threat or Salvation?”, Frankfurt am Main, 23 November 2007. *  *  *  Ladies and Gentlemen, Let me start off with one general remark: The present significant market correction with episodes of turbulences should not come as a surprise to us. The ECB, as well as the other central banks, has issued warnings in the past on the global phenomenon of under-pricing of risks. In many respects the present episode can be interpreted as bringing to the forefront anomalies and structural deficiencies which we have identified earlier. While it is too early to make a full assessment, I believe there are some first provisional lessons which can already be drawn at the current stage. A lesson that can be drawn is that the growing complexity of instruments has to be monitored very closely. Structured credit markets are exposed to valuation problems, which make the market very vulnerable to a shift in investor sentiment. In the absence of reliable market prices, instruments need to be valued by models. But estimates which the models produce are highly sensitive to underlying assumptions.
In addition, PBC and MAS together announced an expanded Currency Swap Facility last Friday. This will see a doubling in the size of the swap facility from RMB150 to RMB300 billion. The scope of the Currency Swap Facility will also be expanded to allow MAS to provide RMB liquidity to banks in Singapore, where needed. This backstop facility will further strengthen confidence in Singapore’s offshore RMB market, and encourage more financial institutions, corporates, and investors to step forward and participate in the RMB market via Singapore. 36. Secondly, with a strong RMB pool, Singapore can provide enhanced access to RMB funding for corporates and investors. Singapore is a major source of FDI to China and serves as the Asia-Pacific headquarters for many multinational companies (MNCs) and Asian corporates with operations in China. We also serve as the regional treasury centre for a large base of Chinese corporates. 37. With the new RMB clearing arrangements, we can expect financial institutions based in Singapore to reach out to local and regional corporate and investors and encourage greater participation in the offshore RMB market. 38 Thirdly, Singapore can support the integration of offshore RMB with Asian local currency markets and act as a test-bed for new RMB products. The development of a wider range of RMB products will be healthy. It will create additional ways in which corporates can redeploy their RMB funds in the offshore markets, and provide additional products for investment. 39.

But it also means we have a long way yet to go in reducing debts and returning to sustainable growth. 5. We are also seeing important shifts in the structure of global finance, besides the gradual contraction in global liquidity. It is too early to say where we will be five years from now, but some of the broad brush-strokes in this new landscape of global finance are already with us and likely to stay: •  The return on equity in global banking has fallen, and will not return to pre-crisis levels, given stricter capital and liquidity rules. •  Deposits have become more important as a source of bank funding. •  Banks in certain major jurisdictions have retreated from global markets, and worryingly, and may stay in retreat for some time. •  The securitised debt markets should recover, but with less leverage underpinning them, and hopefully greater risk transparency. •  In the derivative markets, there will be greater standardisation of products, and much greater reliance on common market infrastructure – for trading, clearing and reporting of trades. High volume, low-margin platforms will likely gain in competitiveness. •  Wealth management will remain a growth industry, especially in Asia, where the pool of wealth is growing most rapidly and the need for diversification remains great. •  And outside of intermediated finance, companies will seek new ways of raising funds, including through private placements. 6. Will this mean a safer financial world? Maybe.
This operating framework changed as the financial crisis deepened. By December 2008, the FOMC had lowered its target for the federal funds rate from a point target of 5¼ percent in mid-2007 to a target range of zero to ¼ percent. With the federal funds rate and other shortterm interest rates effectively at the zero lower bound, the FOMC’s operating objective for OMOs was expanded to include adjustments in the size and composition of the Federal Reserve’s securities portfolio. In particular, the FOMC initiated large-scale asset purchases (LSAPs) of agency mortgage-backed securities (MBS), agency debt, and later longer-term Treasury securities, in order to put downward pressure on longer-term interest rates, support mortgage markets, and help make broader financial conditions more accommodative. The expansion of the domestic securities portfolio that resulted from LSAPs vastly increased the supply of reserve balances in the system (Figure 1). 4 Importantly, in October 2008, the Fed was granted authority to pay interest on depository institutions’ reserve balances. 5 In an environment of elevated reserve balances that resulted from the Fed’s asset purchases, the payment of interest on excess reserves (IOER) – currently at a rate of ¼ percent – has kept the overnight federal funds rate within its target range (Figure 2).

I will then discuss the implications of these changes for the Federal Reserve’s balance sheet and for the eventual “normalization” of monetary policy when the Federal Open Market Committee (FOMC) believes it is appropriate to remove the extraordinary levels of monetary policy accommodation that it has provided. Finally, I will discuss some of the considerations that must be taken into account in normalizing monetary policy. As always, these are my views and do not necessarily reflect those of the New York Fed or the Federal Reserve System. The desk’s role in implementing monetary policy The Federal Reserve (the Fed) has a somewhat more complex organizational and governance structure than most other central banks around the world, so before discussing recent developments in the implementation of monetary policy, I’d like to take a moment to describe roles and responsibilities within the Federal Reserve System and where the Desk fits in. The statutory basis for U.S. monetary policy is found in the Federal Reserve Act, which was enacted just over 100 years ago.
Moreover, any suggestion in public accounts that deposits are worth less than par could undermine the confidence on which the whole construct of banking is based. These illustrations suggest that different users of accounts may, at least to an extent, want information produced on different bases. And the simple fact is that we will not be able to make progress if different users all assert that their way of calculating or presenting the numbers is uniquely correct. I suggest, therefore, that the users of accounts should recognise that they may in reality need to adjust them to suit their particular purposes - something ratings agencies and other analysts have done for many years. It is encouraging that the Basel Committee on Banking Supervision has adopted precisely that approach in promulgating various adjustments for regulatory purposes to data based on IAS 39. Against that background, it would seem helpful if accounting standard setters required supplementary disclosures in published accounts which would allow different users to make such adjustments. This is important given that, unlike regulatory, fiscal and other public authorities, many private sector users are not in a position easily to obtain information beyond that put in the public domain. Let me turn now to IAS 39 itself as it impacts on the banking industry.

But the fact that firms are starting to grapple with implementation means that they’ve got past denial and bargaining and settled down to acceptance. Smaller firms may be lower down on the preparation curve, although presumably their total risks are also smaller. In December, the Federal Financial Institutions Examination Council presented a one-hour webinar on LIBOR transition that drew about 1,300 participants from supervised firms. Of those who responded to a polling question during the webinar, about one-fifth said it was the first time they were hearing about the topic. To continue forward, several issues must be resolved. For example, what events should trigger the shift from LIBOR to SOFR or another alternative rate? A definitive end to LIBOR is an obvious trigger. But, short of that, what events should prompt the switch? What if LIBOR was nominally available, but the UK FCA used its supervisory power to declare that LIBOR is unrepresentative of the underlying market? Last month, an FCA official highlighted the possibility that this is exactly how the end of LIBOR might come about, and urged market participants to seriously consider this possibility when crafting their fallback triggers.23 In their various consultations on fallback language, the ARRC has proposed that such a declaration by the FCA would trigger the switch to an alternative rate. A clear majority of respondents supported that proposal. I think every market participant should ask how the fallback triggers in their contracts would respond. In addition, the precise mechanism of changing from LIBOR to, say, SOFR will vary.
Home refurbishment is probably also rising sharply. Overall, the supply of capital to households has increased sharply. Debt accumulation was somewhat more than 11 per cent in 2004 and is now considerably higher than growth in household disposable income. This largely reflects the sharp rise in house prices since the mid-1990s. According to TNS Gallup’s consumer confidence indicator for the first quarter of 2005, households are still highly optimistic with regard to their personal finances and the domestic economy. Our regional network confirms this impression, with reports of strong growth in companies that provide goods and services to households. On the whole, household consumption and housing investment are projected to show fairly strong growth over the next few quarters. Even with a strong upturn in the mainland economy, the increase in the number employed has been relatively modest. Productivity rose fairly sharply in the first few quarters after economic growth picked up. Normally, when productivity growth is strong, enterprises again begin to hire new staff. The current upturn has lasted about two years. The fairly low level of growth in employment, as measured by the number of employed, must be seen in the light of the sharp decline in sickness absence through 2004 after rising for several years. The decrease in sickness absence has increased companies’ supply of labour and reduced the need for new employees. Measured in person-hours worked, employment growth was solid last year. The number of person-hours worked rose by 2.2 per cent from 2003 to 2004.

A corollary to the increase in the number of person-hours worked is partly reduced sickness absence and partly three more working days in 2004 compared with 2003. An increase in available person-hours and increased competition and rationalisation in many sectors led to higher-than-normal growth in potential output last year. The economy has therefore been able to grow fairly rapidly for a period without the emergence of bottlenecks in the labour market. In the business tendency survey, manufacturing industry reported rising output volumes and capacity utilisation. Average capacity utilisation in the manufacturing sector is now close to its historical average. Information from Norges Bank’s regional network also indicates an approximate balance between supply and demand in the economy, and that capacity utilisation is close to normal. A normal level of capacity utilisation is consistent with an output gap – the percentage difference between actual output and potential output – that is close to zero. Growth in demand and output is expected to remain high in the near term. Unemployment may fall somewhat more quickly than has been the case over the past year. The output gap is expected to be positive in 2005. BIS Review 27/2005  3  Higher demand for companies’ goods provides scope for increasing prices. Experience shows that inflation is directly influenced by the level of capacity utilisation in the Norwegian economy. Some of the rise in prices for domestically produced goods and services can be attributed to higher margins in the business sector.
In addition, strong productivity within US industry has contributed to improved profit margins. However, the upturn in the USA is expected to be fairly modest, which is mainly because households are expected to increase their low level of savings. (Diagram 1 - savings in the USA). There is a large  2  BIS Review 37/2002  savings imbalance in the US economy. Sooner or later an adjustment is expected. The weakening of the dollar that we have seen recently may be an indication that the adjustment process has begun. The deficit on the current account amounted to 3.9 per cent last year. On top of this, households’ wealth in the form of shares is expected to continue to develop weakly and the rapid price increases on property are expected to subside. The US labour market does not appear likely to improve before the end of the year, which will give a subdued development in real wages. (Diagram 2 - unemployment in the USA, the euro area, Germany and France). At the same time, there is a risk that imbalances in savings in the USA will be adjusted more rapidly and more forcefully with the result that the US economy may lose speed. If the American household sector were to increase its savings and thereby reduce the debt burden more rapidly than is currently predicted, it could lead to a poorer development in consumption than expected and a stagnating economy.

The decline in the average working hours over the past year is partly due to the economic downturn, as overtime has fallen. However, there also appear to be structural factors, such as a rising level of absence due to sickness and central agreements on shorter working hours, behind the decline. This indicates that the reduction in the labour supply could be at least partly of a more lasting nature. The decline in productivity during 2001 was limited in comparison with the declines in 1977, 1980 and 1990. Greater openness towards the world around us, a higher level of education during the 1990s and certain improvements in competitive pressure indicate that productivity will continue to be higher than in the 1970s and 1980s. However, this also presupposes that productivity in the information and telecommunications sector will return to a good level. There are also other risks: Inflation rose more than expected last spring, which was only partly due to price increases of a more temporary nature. The rest was primarily due to wage developments in the services industries. When employment begins to rise once again, while the labour market is strained, there is a risk that the new central wage agreements signed over the coming years will be affected by the fact that others have previously received high wage increases. To summarise: low inflation and consolidated central government finances have meant that there was room for manoeuvre to meet the economic downturn.