samchain/econo-pairs-v1 huggingface dataset:
Even growth theory was sometimes based on demand analysis rather than on the growth of the factors of production and on technological progress. During this period, full employment was the top priority of Swedish economic policy, as is evident in every fiscal plan from the 1950s and 1960s. The idea was that full employment involved a small rate of frictional unemployment of around 2.5 per cent, even though the level was never stated explicitly in policy documents. That level was assumed to correspond to people that at the time of each measurement were in the process of changing jobs or in the process of leaving the education system to enter the labour market or similar. According to the prevalent view, higher unemployment could always be explained by insufficient demand. It was generally accepted among professional economists and the public that the government could fine-tune the economy with the aid of fiscal policy - expenditures, tax receipts and tax structures. It was a question of bridging the cyclical slumps. These ideas prevailed on both sides of the Atlantic, even though there was a school of sceptics both in Europe and the United States. BIS Review 65/2004  1  This policy was highly successful for a long time. For the greater part of the post-war period, unemployment in Sweden remained clearly below 4 per cent. On an annual basis it did not exceed 4 per cent at any time between 1950 and 1990. Why didn’t the successes last?

The latter issue has been discussed more and more in the public domain recently, where it has been claimed that excessively tight monetary policy has resulted in the loss of up to 75,000 jobs, as if a simple relationship existed between interest rate decisions and jobs. Allow me to begin with a retrospective approach to address the issue of monetary policy’s effects on employment in the long run. Employment and inflation in the long term - a retrospective view During the first decades of the post-war era, one of the fundamental theses of Keynes’ legacy was that there was a direct trade-off between unemployment and inflation, implying that decision-makers could secure lower unemployment by allowing inflation to rise. Inflation was moderate and full employment was achieved. Owing to this line of reasoning, the fight against inflation was completely overshadowed by demand management. In addition, the power of monetary policy was constrained by the exchange-rate cooperation at that time - Bretton Woods - which had a fixed exchange rate as its target. When I started my economics education in the early 1960s, monetary policy revolved around quantitative controls of the credit market. Interest in stabilisation policy theory was instead tied to fiscal policy. The economics curriculum focused on the impact of fiscal policy on demand developments. How big are the multiplier effects of public expenditures, tax changes and expenditures financed in different ways? The supply side, i.e. the issue of the long-term sustainable growth rate under full capacity utilisation, was almost entirely overlooked.
The second asked participants to play a simple monetary policy game, setting a short-term interest rate in order to minimise a loss function described by deviations of unemployment and inflation from desired target levels. The data generating outcomes for this hypothetical economy came from a two equation macroeconomic model of a fairly standard kind. Again a structural change - this time to the “natural” real rate of interest - would occur at some point during the game, and, by observing data generated by this economy, players would need to learn about the change in structure in order to set the appropriate interest rate. All the students who participated played both as individuals and in a group. In both experiments success could be measured on a quantitative scale, and both led to a common conclusion: that decisions made by committees were superior to those of individuals. How robust was this result? And what explained it? Last year, a team from the Bank of England attempted an exercise very much like Blinder and Morgan’s monetary policy experiments using a sample of just under 200 economics students from the 3 London School of Economics. Using a simple macroeconomic model that was broadly representative of the UK economy, the experiments examined how the performance of groups differed from that of individuals. And again they found striking evidence that committee decisions were superior.

It must be noted that the above-cited initiatives, formalised in the relevant national strategy, have been substantially supported by renowned international institutions such as the World Bank, the European Central Bank, and central banks from EU countries. Hence, let me now extend my sincere appreciation to these institutions for their support, and to their distinguished representatives who will share with you today their experience in the development of retail payment systems market. From the perspective of communication and cooperation, the regional cooperation and sharing of experiences is deemed as very important and fruitful. As a result of market development and cultural characteristics and financial education level in the countries of our region, experience sharing assumes particular importance, as it may contribute significantly to achieving the goals more effectively. Last but not least, another development is the joint initiative of the Bank of Albania, Ministry of Finance and Economy, and Minister of State for Diaspora for a higher attention related to attracting and effectively using remittances, as a component of retail payments. At the international level, remittances make a significant contribution to the economy and welfare of the people, and are considered as accelerators to financial inclusion. The Bank of Albania, therefore, in addition to the aimed developments in the national strategy for reforming the retail payment systems, is engaged in preparing an annual publication on remittances.
The US literature on ethnic minority pay has tended to focus on wage differentials between white and black ethnic groups, the two largest ethnic groups in the US. Studies have tended to find a large wage differential between black and white men, although this does appear to have reduced over time with the black/white earnings ratio increasing from just under 60% in 1967 to around 80% by 2009 (Lang and Lehmann (2012)). This broadly mirrors trends in the gender pay gap. Studies looking at wage gaps over the life-cycle find that there is little evidence of an ethnicity pay gap during early working life, but that this grows to around 14% by age 40 (Tomaskovic-Devey et al (2005)). Evidence on the role of education on the size of the ethnicity pay gap is mixed. Some studies find that, among young men, the black/white pay differential appears, in part, to be explained by education (O’Neill (1990), Rodgers and Spriggs (1996) and Carneiro, Heckman, and Masterov (2005)). For example, the pay differential decreases when controlling for performance on the Armed Forces Qualifying Test (Neal and Johnson (1996)). Studies also find that, among college-educated men, there is no difference in pay between black and white males (Black et al (2006)). This might suggest the ethnicity pay gap can largely be 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  explained by human capital differences in white-collar sectors, but not in blue-collar jobs (Bjerk (2007)).

Note: A positive gender pay gap in this chart indicates that women earn less than men. Finally, if we look at unconditional gender pay gaps by sector (Chart 10), these gaps are broadly-based across sectors. The largest gaps are in the finance sector, both in London and the rest of the UK. These average close to 40%. This is materially larger than the next-worst sector, ICT, which averages around 30%. The evolution of the gender pay gap in finance suggests it has fallen only modestly, from over 45% in the mid-1990s to around 38% in 2018. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  Chart 10: Median gender pay gap by sector, sample average  Gender pay gap, per cent  45 40  London  Other  35 30 25 20 15 10 5 0  Agriculture  Industry  Construction  Trade and transport  ICT  Male male  Finance  Real Estate  Professional Public sector  Other  Female female  Source: ONS Labour Force Survey and Bank of England calculations. Note: A positive gender pay gap in this chart indicates that women earn less than men. The unconditional ethnicity pay gap exhibits a rather different pattern than the gender pay gap. This gap has also been materially lower, averaging around 4% over the sample. As the gender gap fell sharply in the decade to 2005, the ethnicity pay gap was broadly stable at around 2% (yellow dots in Chart 11).
The U.S. was not alone in this shortcoming, but given our position in the global financial system, we especially should have done better. We’ve taken important steps reflecting both new legislative mandates and a broader effort to rethink our regulatory and supervisory framework. In particular, systemically important banking organizations must now hold amounts of capital and liquidity that are better aligned with their risk profiles, compensation schemes for these institutions will be more focused on rewarding long-term results and the official sector is making progress in solving the “too-big-to-fail” dilemma. All of this remains very much a work in progress. But, these efforts should help us to avoid repeating the mistakes of the recent past, and to take a more proactive stance toward mitigating potential future vulnerabilities. Of course, we at the Fed are not alone here. Since the recent financial crisis, central banks worldwide have been engaged in a broad rethinking of how to better fulfill their mandates. Let me close with a final thought. The largest problems that countries create for others often emanate from getting policy wrong domestically. Recession or instability at home is often quickly exported. Equally important, growth and stability abroad makes all our jobs easier. This means that there are externalities in the work we do, so that more effective fulfillment of our domestic mandates helps to bring us to a better place collectively. Ensuring global growth and stability is and will remain our joint and common endeavor. BIS central bankers’ speeches  3

5  CFTC UBS, 2012, page 12. 6  CFTC UBS, 2012, page 13. 7  CFTC Barclays, 2012, page 13. 4  BIS central bankers’ speeches  We have learned as well that compensation and hiring practices also helped to undermine the integrity of the reporting regime. For example, we have seen that compensation and promotion within a bank are often tied to a trader’s market share and profitability. In addition, traders often move between firms so having a network of external contacts and being viewed as a team player could help to support job mobility. Consequently, one can conclude that even the loss of a job is not necessarily a permanent setback, and that market participants with allegations of improper behavior could potentially move on to other firms with the expectation that they would generate revenue and profits for their new employer. These incentives were amplified by the structure of the markets that underlie the setting of LIBOR and those that use LIBOR. The interbank cash borrowing market that LIBOR references is very small relative to the enormous markets that use LIBOR, for example interest rate derivatives. The standardization of settlement dates further concentrated trading activity. In this type of environment, relatively small changes in LIBOR submissions – either because the actual borrowing costs fluctuate or a submitting bank intentionally misreports its submissions – can have substantive effects on a trader’s profitability because the trader can hold large derivatives or futures positions that reference the cash LIBOR rate at the time these contracts settle.
Including exchange rate effects, in Sing Dollar terms, MAS recorded a net loss of $ billion. In short, we made good investment gains, but when measured in Sing Dollars, these gains were more than offset by the strength of the currency. If we had reported our P/L in an international currency it would show a healthy profit. The effect of a strong Sing Dollar on our reserves should be seen in a broader context. First, the international purchasing power of our reserves is unaffected by strength of Sing Dollar. MAS’ foreign reserves serve two primary purposes in times of crisis: they finance our imports from the rest of the world, and safeguard the value of our currency. On both fronts, it is foreign currency value of the reserves that matters. Second, the strength of the Sing Dollar has safeguarded our domestic purchasing power. It has helped to moderate the increase in Singaporeans’ cost of living. For instance, while global oil prices rose by 20% in FY2010, domestic prices of oil-related items increased by only 10%. Or take another example of food prices. During FY2010, the rate of increase in food prices in Singapore was about half of that in our major trading partners, which includes both advanced and emerging economies. Last, I will elaborate on our efforts to maintain high regulatory standards. MAS is well-placed to meet higher global standards emerging from international regulatory reforms following the crisis.

SEPA and TARGET can be clearly seen as two examples of how the euro has catalysed European financial integration with the Eurosystem, the central bank of the euro area, as an agent. The euro was also instrumental in improving our ability to fight economic and financial crises. As always it required resolute and immediate action, and sometimes an adaptation of the initial governance of the EMU, with the SSM standing out here as the best example. Moreover, the euro is not simply an elite project as is frequently claimed. It is also a popular success. According to the latest standard Eurobarometer poll conducted this summer, support for the euro increased in the first half of 2022 in both the euro area and France [up 3 pp in the euro area and5 pp in France]. Support for the euro is now at its highest level ever in the euro area, at 80%, 74% in France. These examples illustrate how the resilience of the euro area to shocks was improved, sometimes by a deeper integration and sometimes by an ability to adapt the governance to new circumstances. However, the current environment and the macroeconomic outlook clearly bring new geopolitical, social, economic and financial challenges. From the Eurosystem and its monetary policy perspective, the main risk to fight in order to ensure price stability in the medium run is no longer that of "too low inflation for too long", but that of "too high for  1/4  BIS - Central bankers' speeches  too long" inflation.
Along with purely statistical procedures, the estimation of the long-term equilibrium level of the non-financial private sector’s long-term financing that the calculation of these indicators requires can be done using models that include the determinants of the demand for credit [Galán y Mencía (2021)]. In any event, the decision to activate the CCyB, which is reviewed quarterly, should not follow an automatic rule based on the trend of this indicator; rather, the regulations in force emphasise the need to take other complementary indicators into account. The Banco de España also tracks potential imbalances in house prices, and in the current account balance, among others. This latter variable reflects how in small, open economies, when the financial cycle is in expansion, a portion of this financing is usually obtained abroad, consequently materialising in a current account deficit. It is moreover crucial to analyse the sectoral disaggregation of credit indicators to identify risks that may be originating in specific sectors. Lastly, we pay particular attention to the output gap, which I will discuss in greater detail later. 13  As to the cross-sectional dimension of systemic risk, the key indicators seek, inter alia, to measure the relative size of a bank, its centrality in the national banking network, its interconnectedness to the rest of the financial system and to other countries’ financial systems, and the complexity of the activities it pursues.

Macroprudential policy for the banking sector cannot suffice to contain the systemic risks 8  See Martínez Miera and Vegas (2021). 18  threatening financial stability if such policy omits the other financial sectors. Indeed, the introduction of new requirements in one part of the financial sector may inevitably induce a shift in or migration of risks to other sectors of the financial system, because the latter are less regulated or simply subject to looser regulation. It is thus vital to also have a macroprudential framework that can reach all segments of the financial system. To date, however, macroprudential policy has been largely confined to the credit institutions sector. Thanks to the work of the BCBS and to the regulatory commitments of the key European institutions and national authorities, it has been possible to develop a macroprudential framework on the basis of microprudential capital requirements. In other financial sectors, by virtue of their activity and the characteristics of the agents operating in them, it would be necessary to develop a specific typology of instruments that act to the benefit of financial stability and fit, in turn, into the general prudential and regulatory framework prevailing in such sectors. Thank you. 19  References Adrian, T., N. Boyarchenko and D. Giannone (2019). “Vulnerable Growth”, American Economic Review, vol. 109, no. 4, pp. 1263-1289. AMCESFI (2020). Annual Report 2019. Anguren, R., L. Gutiérrez de Rozas, E. Palomeque and Carlos J. Rodríguez García (2020). “The regulatory and supervisory response to the COVID-19 crisis”, Financial Stability Review, no.
The article was more or less an explicit encouragement to readers to withdraw their money from the bank and go to the Riksbank to redeem it for gold: “Anyone who brings SEK 1,000 in banknotes to the Riksbank has the legal right to receive 50 SEK 20 [gold coins] and these currently have a value of SEK 1,450 – 45% profit on the most risk-free of investments”12 The final results were indeed an onslaught of people who wanted to redeem their banknotes at the Riksbank, who were therefore forced to raise the discount rate in order to defend the gold reserve. In connection with this, the Riksbank requested release from the obligation to redeem banknotes for gold, which was subsequently also granted. ...but it was also followed by deflation and recession However, shortly afterwards the trend was reversed. There were various reasons, including the weakening of international economic activity. But the most important reason for the severe turnaround in general prices was connected with the view of the monetary system that prevailed at the time. The political view was that Sweden should return to the gold standard as soon as possible, and to the parity that had applied before the war. To make this possible, the krona needed to be strengthened, which required bringing down prices and 11  See, for example, Fregert (2013) and Hasselberg (2021). 12 Statsvetenskaplig tidskrift, [Political science journal] May 1922, p. 151. 6 [14]  wages. It was therefore recognised that a period of actual deflation would be required.

Thus, we would need rules not only like the Stability Pact, for a maximum deficit in a downturn, but equally some forceful rule for fiscal rectitude in good times. Those rules are difficult to state as clearly as the 3 per cent limit, but one way ahead could be to define annual targets for actual net lending based on the predicted output gap. But why didn’t we see these problems from the beginning? Perhaps because we were fortunate to have something that can work as a temporary replacement for rules: clear objectives, strong leadership and the market as a quickly reacting judge. This existed not so long ago in Europe. The objective was to join the euro zone and achieve the convergence criteria. The leadership was provided  BIS Review 66/2004  1  by Germany both in terms of its economic size and its example of fiscal discipline. Now the objective of joining the euro has been achieved, and, in addition, Germany has lost its leading role and the markets react less to fiscal laxity. Instead of leadership towards clear objectives we have recently seen the opposite - the political exploitation of the gap between the national and European level. The requirements of the Pact are blamed on heartless “accountants in Brussels”, and when a majority puts narrow national political interests first the agreed rules become moot - “peer pressure” becomes “peer protection”. Incorrect facts are more or less deliberately sent to the Commission ahead of sensitive elections.
4  BIS Review 116/2008  Indeed, the liquidity policy aided the transmission of monetary policy even in the turbulent times experienced over the past year, while monetary policy was left free to focus on its overriding objective of ensuring price stability. I strongly believe that especially at times of high uncertainty and rising inflationary pressures like the present, a stable and predictable central bank policy and the firm anchoring of inflationary expectations are of particular importance. There is no doubt that these are very challenging times for our economies. Some scientists argue that wildfires can be in the long run beneficial to wildlife as over time barren burned areas are covered by healthier new growth. Without pushing too far the analogy, let’s hope that the equivalent applies to the weakest segments of our financial systems. This will very much depend on the ability of all concerned parties – both public and private – to draw the right lessons and thoroughly implement them. Bearing this in mind, I look forward to the second day of this conference, during which the regulatory implications of the ongoing events shall be discussed. I wish you all a pleasant evening. BIS Review 116/2008  5

A better arbiter of market power may be measures of market contestability, in particular the potential for barriers to entry to and exit from the market. Entry and exit rates from banking have, historically, tended to be very modest by comparison with the non-financial sector and other parts of the financial sector, such as hedge funds. For banks operating in many markets and offering a range of services, aggregate returns may offer a misleading guide to the degree of market contestability. Looking separately at the different activities financial firms undertake provides a potentially clearer indication of the drivers of performance and the structural factors determining them. In this respect, JP Morgan Chase provides an interesting case study. JP Morgan Chase is a large universal bank offering a full package of banking services to customers, retail and wholesale. Its published accounts also provide a fairly detailed decomposition of the returns to these different activities. Chart 36 looks at the returns on equity at JP Morgan Chase, broken down by business line and over time. These estimates are based on the firm’s economic capital model. So provided this model adequately captures risk, these estimates ought to risk-adjust returns across the different business lines, allocating greater amounts of capital to riskier activities. (a)  “Low risk/low return” business activities  Consider first some of the activities generally perceived to be low-risk/low return – asset management and treasury and securities services and retail financial services.