samchain/econo-pairs-v1 huggingface dataset:
It’s also because, at least in the short run, costs are “convex” (Chart 3): the rise in costs and prices in areas where there’s strong demand are larger than the equivalent declines in sectors where demand is weak. Chart 3: Convexity means greater dispersion in demand increases average costs  Saunders (2021) “The inflation outlook” speech given during an online webinar and Haskel (2021) “Will the pandemic “scar” the economy?” speech given in online webinar at the University of Liverpool Management School. 3  4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  Perhaps unsurprisingly, in response to what is a global pandemic, we’ve seen similar shifts elsewhere. Across the OECD as a whole, consumption of services in the first quarter of this year was still well below pre-pandemic levels, but spending on goods – durables in particular – was significantly higher (Chart 4). Compounded by specific hits to supply in some areas these have contributed to large rises in the price of many traded goods – not just oil, but other basic commodities and some intermediate manufactures, such as computer chips, as well. Indeed in several cases it’s not even been possible to get hold of such things, except after a long delay. These “bottlenecks” are what you’d expect to see if you had a more angular, “L-shaped” version of the smooth cost curve in Chart 3 (Chart 5).

Many other tradable goods have to go through several steps before reaching the final consumer and pass-through of their price changes is probably more gradual. Based on past experience – notably the big falls in the value  In the latest monthly data services inflation was (just) higher than 2%. But there’s a case for measuring these “contributions” relative to past averages, to take account of trends in relative prices. On that basis, because services inflation is well below average, more than all the overshoot in aggregate inflation can be attributed to the goods side. In general, one should be careful in using these “contributions”, or at least make sure not to treat all else as equal. Over the medium-to-longer term, inflation is determined by monetary policy (and the credibility in the regime) not by individual components of the CPI, with relative prices determined by real forces (e.g. the relative demand for goods and services). So over time, assuming the inflation target is on average met, the true “contribution” of a rise in one particular component is likely to be zero – the counterpart is simply weaker inflation in other prices. 15  20  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  20  of sterling in 2009 and 2016 – rises in import prices driven by exchange-rate depreciations seem to take longer – perhaps up to 2-3 years – fully to feed through.
Nearly half of the world’s population now has Internet access, with over a billion more people coming online in the past five years alone. More and more advances in digitalisation and information technology can improve resource use in industries where productivity growth has so far been low. Retail trade and the financial sector in Norway have already shown that efficiency gains can also be achieved in traditional service industries. With the advent of driverless vehicles, the transport sector could well be the next to undergo a major transformation. A more integrated global econonomy – but an uncertain outlook International trade and cooperation have been drivers of global economic growth. Open borders are particularly important for an economy like Norway. They have given us access to technology and capital and put us in a position to exploit our own strengths in the production of goods and services. Much of the welfare gains we have experienced have come from reaping the benefits of 4/9  BIS central bankers' speeches  economic specialisation. Since the Second World War, the proponents of free trade have had the wind in their sails. Around 1950, international trade accounted for close to 20 percent of world GDP. Today, the share is three times that. This change has been politically willed. Customs duties have been lowered and trade barriers lifted. Technological advances have also enabled more and more goods and services to be traded across countries.

There has always been a considerable risk from having a large share of the nation’s wealth linked to a single commodity. But this share has fallen. Only a decade ago, oil and gas reserves made up two-thirds of Norway’s petroleum wealth. Today that share has dropped to about a third. Our aggregate wealth has become more diversified, which means we can tolerate slightly higher volatility in our financial wealth. The Government has today announced that it will propose an increase in the equity allocation in the oil fund to 70 percent. At the same time, the estimated expected real return on the oil fund is adjusted down to 3 percent. The choice of equity allocation is an important decision. But an even more important choice is the level of oil revenue spending. Fluctuations in the value of the fund present challenges for fiscal policy and for the fiscal rule. Let me comment somewhat further on this issue. The oil fund and the fiscal rule have long been important pillars of Norwegian economic policy. One key goal has been to preserve large parts of our petroleum wealth for future generations. There has also been an explicit desire to shield the Norwegian economy from swings in oil prices. Allow me to quote from the Revised National Budget for 1995: “Revenues from the petroleum sector vary more over time than other revenues.
That is a massively attractive narrative one can offer for potential investors from all over the world. Now, if I may talk about some of the policy support offered by the Government. The EDB has initiated a National Export Strategy  which, as you know, is a collaborative effort between the Government and the private sector and it provides a five-year action-oriented frame work for the development of trade and competitiveness. Simultaneously, a National Trade Policy has now been drafted. It is a very neat 20-page document, very tightly and coherently drafted, and this is the first time we have formulated, in this concise way, the country’s trade policy, which for me, is actually very well presented. An Anti-dumping bill is also in Parliament. It is very important, if we are going to open up some sectors as part of the trade Page 15 of 17  agreements. The Government is also working on a Trade  Adjustment Package  with the World Bank and the International  Trade Center, in Geneva. What that intends to do is to assist  companies, which are going to be affected by liberalization to become more competitive, and also to assist workers, whose jobs have been threatened, to re-train. Now, I’ve talked on SMEs, for export promotion. There are four areas where they require support. 1. Training; 2. In-puts, including technology; 3. Access to finance; and 4. Marketing. Invariable the biggest challenge is marketing.

Why exports and FDI are key pillars: when you have a domestic market of twenty-one million people and purchasing power of now Page 1 of 17  almost four-thousand US dollars, you simply cannot sustain the 6% or more growth that we need to achieve by just selling into this domestic market. It’s simply not possible. And why do we need 6% growth? We have a very aspirational  society now or more. It’s an educated society which is exposed to all the latest communication technologies so people know what is available around the world and they aspire to achieve a lot of material benefits for their families. So if one cannot deliver that, clearly there could be tensions in terms of our social and political stability. So it has to be growth in exports that drives our growth process to the point where we can achieve 6% plus growth to meet the aspirations of our people. And FDI, if you look around Asia, which has been the most successful continent in terms of growth and export performance, whether it is a country as large as China or one as small as Singapore, FDI has played a key role in the export transformation that has driven those economies. So that’s the model that the government is trying to put in place. It is doing a number of things to sustain that model in terms of the macro-economic policy making. have been put in place.
The expanded scope has led to a rapid growth in the transaction volume of RMB trade settlement in Hong Kong, which was increased from a monthly average of 4.5 billion yuan in the first half of 2010, to more than 87 billion yuan in the fourth quarter, representing an almost twenty-fold increase during the period. To date, Hong Kong accounts for about 75% of Mainland’s RMB trade settlement. This clearly demonstrates the strong preference of market players for making use of Hong Kong’s platform for RMB trade settlement. The highly efficient and reliable RMB Real Time Gross Settlement (RTGS) system in Hong Kong has played a significant role here. We are the first and so far the only place outside Mainland China that has developed a full-fledged RMB RTGS system, enabling us to handle the settlement of cross-border trade between the Mainland and other economies in a safe and efficient manner. China is one of the biggest trading nations in the world. The potential for further increases in RMB trade settlement is considerable given that the current volume only accounts for a small fraction of total trade between China and the rest of the world. RMB trade settlement proceeds will represent an important and sustainable source of growth in offshore RMB funds in Hong Kong. The third dimension is RMB wealth management business. The RMB wealth management business in Hong Kong took off last year after the RMB Clearing Agreement was revised in July 2010.

Today I will highlight two aspects that I believe are key drivers for Hong Kong’s growth in the next few years. The first is the gradual financial liberalisation in Mainland China and the second is the wider external use of the renminbi (RMB). The gradual financial liberalisation in mainland China In the gradual financial liberalisation process in Mainland China, we can observe three key patterns: inflows being de-regulated before outflows, direct investment flows being liberalised before portfolio investment flows, and collective investment schemes being relaxed before individual investors. Specifically, during the early stages of Mainland China’s reform process, in the late 1970s and early 1980s, only Foreign Direct Investment (FDI) was encouraged. Hong Kong has been the largest source of FDI for the Mainland, accounting for more than half of the total amount in 2009. In the opposite direction, Mainland China’s Overseas Direct Investment (ODI) has also been liberalised gradually over the years. Hong Kong has been the largest recipient of ODI flows from the Mainland. At present, about 60% of ODI from the Mainland has gone to Hong Kong or via Hong Kong to other places. The significant share of Hong Kong in Mainland’s FDI and ODI underscores the unique role of Hong Kong as a gateway for foreign enterprises to access the Mainland market, while at the same time being a springboard for Mainland institutions to gain exposure to international markets. With respect to portfolio investment flows, market attention has been focusing on portfolio flows from advanced economies towards Mainland China.
Table 3 The credit cycle and subsequent crises  Total peaks 1880–2008*  Crisis years** within 5 years following a peak  % peaks with crisis years within the following 5 years  Banking crisis within 5 years following a peak  % peaks with Banking crisis within the following 5 years  AUS  9  6  66.7%  2  22.2%  CAN  11  6  54.5%  2  18.2%  DEU  9  2  22.2%  1  11.1%  DNK  10  4  40.0%  3  30.0%  ESP  8  5  62.5%  2  25.0%  FRA  5  3  60.0%  1  20.0%  GBR  9  7  77.8%  3  33.3%  ITA  11  8  72.7%  6  54.5%  NLD  8  1  12.5%  1  12.5%  NOR  13  5  38.5%  2  15.4%  SWE  10  4  40.0%  2  20.0%  USA  9  6  66.7%  5  55.6%  112  57  50.9%  30  26.8%  * Interwar data missing for most countries. Data coverage incomplete for other countries e.g. only post-1945 data available for France. ** Defined as years in which either a banking crisis or a currency crisis or both (“twin crisis”) occur. Source: Bordo et. al. (2001) and Bank calculations.

The return generated by Norges Bank’s investment management in 2008 was 3.4 per cent lower than the benchmark portfolio used as performance measure. This is considerably weaker than might have been expected in light of our investment strategy, which relies on a large number of small, independent positions. In the period since 1998, the Fund has recorded a cumulative annual excess return of 0.04 percentage point lower than the return on the benchmark portfolio defined by the Ministry of Finance. Norges Bank’s aim is to generate added value through our investment choices. After many years of high performance, the Fund is now right back where it started. The Fund’s underperformance and the fall in overall return can largely be attributed to the financial crisis. Assessment of the results of our active choices should, in our opinion, also take into account the long-term perspective on which the Fund’s investment strategy is based. Norges Bank’s investment results since 1998 are different for the two asset classes equities and fixed income instruments. Although active equity management generated negative results in 2008, these were well within the limits predicted by our risk models for any one year. However, since the beginning the annual excess return on equities has been close to ½ percentage point. We have established an equity management strategy that seems to be fairly robust to market fluctuations and that has, as we have seen, generated solid returns viewed over a longer period. Developments in the Fund’s fixed income portfolio have followed a different path.
Increased global engagement in Shariah matters among scholars, practitioners and regulators through international discussion platforms, together with the massive flow of knowledge, ideas, technology and people across borders also cumulatively foster a greater global understanding on the practices in Islamic finance. Innovation has fundamentally transformed the global financial landscape at a rapid pace and is undeniably a driver to sustain growth and to secure the competitive advantage of financial market participants. In the context of Islamic finance, the broadening of the frontier of product development can be further propelled by intensifying exploration, research and development initiatives and through intellectual discourse and engagements. It is duty-bound for us to continuously expand the dimensions of Islamic finance, hence contributing towards improving financial stability and economic prosperity in the interest of the local and global community. I am confident that this conference and the opportunities presented for deliberation on the research papers will be a fruitful one. I wish all delegates and participants a successful conference. With the lafaz Bismillahir Rahmanir Rahim, it is my pleasure and honour to declare open the 2nd Foundations of Islamic Finance Series Conference. BIS central bankers’ speeches  3

There are now 14 Asian economies at investment grades, of which, nine are at or above the single A rating. At the same time, the supply side factors are also highly favourable. The huge financing needs of Asia will support a continuous expansion in bond issuance. According to the Asian Development Bank, Asia’ s infrastructure financing needs alone amounted to USD 8 trillion from 2010 to 2020. Equally important is the emergence of new and attractive bond asset classes. The two products that have caught most attention of global investors are the sukuks in Malaysia and the RMB dim sum bonds in Hong Kong. This is rightly so as these products connect the global market with the vast and increasingly prominent financial systems in the Islamic world and China. We have seen very encouraging development of the sukuk market in Malaysia, the symbol of Islamic financing. The amount of outstanding sukuks in Malaysia increased substantially from MYR 146 billion (USD 41.3 billion equivalent) at the end of 2006 to MYR 361 billion (USD 113.9 billion equivalent) at the end of 2011. Meanwhile, the growth of the RMB debt securities market has been phenomenal. In a short space of 5 years, the annual issuance amount lodged with the Central Moneymarkets Unit (CMU) in Hong Kong increased by 16 times from a modest amount of RMB 10 billion (USD 1.4 billion equivalent) in 2007 to RMB 172 billion (USD 27.3 billion equivalent) in 2011.
With the arrival of the nine-person Monetary Policy Committee (MPC) in 1997, the number of published speeches increased further from around 13 per year in the nineties to around 34 in the noughties. Accompanying these speeches were published minutes of MPC meetings. 14 15 16  See Brunner (1981) and Goodfriend (1986). As described by King (2000). Capie (2010). 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  In 2013, the Bank began issuing so-called “forward guidance” on its policy actions. 17  In 2014, following a  review by David Stockton, the Bank began publishing forecasts for a wider set of variables. 18  And from  2015, following a review by Kevin Warsh, the Bank agreed to publish full transcripts of MPC policy meetings (Table 1). 19  These publications do not capture the entirety of the Bank’s engagement strategy. In 2016 alone, the Bank appeared before Parliament on 22 separate occasions. Senior Bank officials made around 60 visits to the Bank’s regional agencies across the UK. Bank officials visited nearly 5,000 companies and charities. The Bank ran a schools competition, involving over 250 schools. And it hosted a Future Forum, at which it engaged openly with a broad cross-section of the public on a wide range of issues. These step changes in transparency have been broadly mirrored across a range of other central banks.

Complex language is these days more likely to breed mistrust than mystique. Expert opinion has become a source of scepticism rather than reassurance. The well-directed Tweet has displaced the well-argued speech, the Facebook “like” the approving newspaper review, the smiley-faced emoji the hand-written thank-you note. 58  That change in the nature of public language – shorter, simpler, shriller - puts an even greater premium on institutions making themselves understood, despite (indeed, because) of the technocratic task with which they are charged. That means speaking in words and sentences that land rather than levitate with the public, that connect rather than divide public opinion, that illuminate rather than darken public debate. So how well do central banks fare on that front? Earlier this year, the Campaign for Plain English, a militant band of grammarians, turned its attention to the Bank of England MPC’s Monetary Policy Statement. This statement is intended to be a simplified and sanitised account of the MPC’s judgements. The Campaign for Plain English described it as “worthless, impenetrable waffle” and “gobbledygook”. Reading between the lines, I am not sure they liked it. These views are instructive, but subjective. More objective measures have been developed, however, that enable us to measure the linguistic complexity of written and spoken material. For example, some of the more widely-used of these metrics are based on word and sentence length, the use of different word types etc. 57 58 59  59  These metrics can be applied to central bank publications.
But how can this potentially damaging link between the mortgage and real estate markets, the banking system and financial stability be explained? First, it is important to remember that these markets represent a major concentration of risks, especially for banks and households. Thus, mortgage claims in Switzerland are the biggest asset item on banks’ balance sheets. They account for roughly 30% of total assets in the banking system – and if one considers only the domestically focused banks that operate predominantly in the Swiss credit market, this percentage rises to 70%. Moreover, residential property is the most important asset overall of households in Switzerland, and mortgage loans are their largest liability. Around 45% of household wealth is invested in real estate, and mortgage loans account for a full 95% of household debt.5 These figures highlight a further important aspect: The real estate market is largely debt financed. Roughly 95% of mortgage loans are granted by banks. There are thus close links between the mortgage and real estate markets and the banking sector. A final important fact is that real estate markets have historically been subject to prolonged and pronounced cycles. Such cycles can last for years or even decades. During the long upswing phases, risks tend to be underestimated, thereby leading to excessive risk-taking by households, companies, investors and banks. A downswing, by contrast, can generate the mutually reinforcing effects of falling prices and loan defaults. This can lead to severe upheavals in the banking system and entail high economic costs.

The picture of employment is nevertheless rather divided. The number of jobs in the manufacturing industry has declined markedly, while jobs in the public sector and the service industries have increased. Given this, the situation on the labour market is of particular interest. It appears to be relatively constrained, considering that we are at the end of an economic downturn and wage increases have also been slightly higher than expected, particularly in the construction sector and the service industries. As the level of employment has been retained, despite the decline in demand, productivity has shown a weak development, particularly in the services sector. To some extent, the effect of companies' higher costs has not had an impact on prices, but instead led to falling profit shares. However, it now appears that the demand situation has enabled companies to shift a larger part of the cost increases onto consumers. So, how come wage increases have been higher than expected? One possible explanation may be that the resource utilisation in the economy has been higher in recent years than we had earlier believed. A strained resource utilisation means quite simply that the total demand is high in relation to the production capacity of the economy. This is usually revealed, for instance, in rising wage increases and higher underlying inflation. In the Inflation Report presented on 19 March 2002, we have made a slight upward revision for resource utilisation.