samchain/econo-pairs-v1 huggingface dataset:
The way of using privatization receipts should not only support the short-term economic growth objectives, but should also affect the economic operators’ expectations for stable economic growth in the future. The latter can be achieved by using additional revenues to reduce debt levels and support reforms for structural changes in the economy. Dear participants, Currently, we are of the opinion that the concept of long-term development strategies of a deeply national character is an important issue for the stable long-term growth in our region. Lacking a regional perspective does not favour the individual success of small economies in the global economy. The process of connectivity and integration of transport infrastructure should continue with the integration of development strategies, capital markets, the labour and primary commodities, and energy infrastructure. Our economies are vulnerable and contaminable  2  BIS central bankers’ speeches  from global developments because they are small economies in an economic region fragmented and dependent on foreign inflows in the form of investments, exports and remittances. Increase in the market share, ease in production factors mobility (capital, labour, and raw materials), integration of financial and payment systems, integration and coordination of scientific and educational curricula and addressing of challenges from a regional perspective would make the region an attractive and integrating economic place. This integration would identify the comparative regional advantages, enhancing at the same time the competitiveness of each of our economies.

Furthermore, the Executive Board decided that the key policy rate should lie in the interval 4-5 per cent in the period to the publication of the next Monetary Policy Report on 27 June 2007, conditional on economic developments that are broadly in line with projections. According to the Executive Board’s assessment, the prospects and balance of risks suggest that it would be appropriate to raise the interest rate gradually to about 5 per cent in the course of this year and to a somewhat higher level in the period to summer 2008. Developments in the krone exchange rate will also influence the pace of interest rate hikes because a considerably stronger krone may result in inflation that is too low. Under an inflation targeting regime, it is important to be mindful of the effects of higher interest rates on the krone exchange rate when inflation is low. The interest rate differential against trading partners may widen somewhat further ahead in the projection period. Since such a development is already widely expected in financial markets, we have assumed that it will have limited effects on the krone exchange rate. However, there is considerable uncertainty surrounding the exchange rate projection. The projections are shrouded in uncertainty. The projections for inflation, output, the interest rate and other variables are based on an assessment of the current economic situation and the functioning of the economy. We have illustrated the uncertainty surrounding the projections for the interest rate, inflation and capacity utilisation with fan charts.
I should add that there are other initiatives being developed, with the aim of positioning the banking system of Hong Kong to take advantage of further financial liberalisation in the Mainland. I hope they can be agreed, announced and introduced soon. Short-term risks However, the generally good news in recent months should not blind us to the problems that remain in our economy or to the risks that face us. While the economy has been recovering strongly, it has not been creating as many jobs as we all would like to see. It is also uncertain to what extent the budget deficit will be reduced, as government revenues recover along with the economy. To be sure, the difficult investment environment is not helping us in our attempt to meet the budgeted investment income for the fiscal reserves. Disappointments on these fronts may affect market sentiment in the short term, although the determination and ability on the part HKSAR government in tackling the remaining, structural components of these problems should not be in doubt. Furthermore, there is a risk that our financial markets could over-react to external developments, notably stronger than expected monetary tightening in the US, macro-economic adjustments in the Mainland and sharp increases in oil prices. Although it is unlikely that these external factors would derail our economy, and so this risk seems small, under extreme market conditions, short-term volatility in financial markets could have a bearing on monetary and financial stability in Hong Kong.

And any review mechanism must take careful account of the implementation costs incurred by banks when the rules change. But it is costly, too, to persist with regulatory standards where they are clearly out of line with market practice. Real effort has been made to tie the Accord to best market practice and thus to changes that banks will need to introduce anyway. Going forward, the guiding principle, difficult I know to achieve in practice, should be to keep to a minimum the difference between expenditure that banks would be incurring in any event and that required by regulators. Part of the trick is to ensure sufficient continuity of core aspects of the standards, so that changes to basic IT systems etc are minimised or at any rate can take place over time. Time is, after all, a major help in this respect. Implementing systems changed as part of the software obsolescence cycle may involve only modest marginal cost. More immediate and discrete changes are always going to be more costly. These issues will clearly need further discussion. In the EU context, however, it is particularly important that the arrangements for revising any Directive reflect, if not the letter, at least the spirit of Lamfalussy. It would be wholly inappropriate to try to hard code all the detail of the pillar one rules in an EU Directive, as if these can necessarily stand for a long period of time.
Last month Moody’s issued a Special Comment on Iceland 2 , bearing the title “Iceland’s AAA ratings at a crossroads.” The Special Comment provided grounds for the credit rating Moody’s awarded Iceland – the highest the agency gives. In particular, it examined the ability of the Icelandic government to weather serious financial shocks and concluded that the government was able to do so. It also pointed out that further international expansion of the Icelandic financial system could strain that capacity. The report suggested that it might be worthwhile to examine the possibility of fortifying the Central Bank’s foreign reserves, establishing a co-operative relationship with central banks in countries where Icelandic banks have extensive operations, and perhaps tightening the framework for the banks liquidity management. All of this is being considered. I wish to emphasise, however, that here in Iceland banks are subjected to more stringent liquidity requirements than banks in many other countries. Liquidity rules were set by the Central Bank a decade ago, and monitoring is carried out to ensure that individual banks abide by them. In addition, the Financial Supervisory Authority set its Guidelines on Foreign Currency Liquidity Management late in 2004. The objective of the Guidelines was to promote careful practise as regards liquidity management, and they contain 10 fundamental criteria for best practise. Since that time, the Financial Supervisory Authority has ensured that companies adopt these criteria.

Research indicates that a fall on the stock market affects household confidence relatively quickly, that is already after two to four weeks.5 The indicator of Swedish consumer confidence in the economy published by the National Institute for Economic Research tends to fall when the Stockholm stock exchange falls (see Figure 6). There may therefore be good reasons for believing that the recent falls on the stock markets of the world are one of the reasons why the Swedish households have become more cautious and are expected to increasing their saving. Financial turbulence has also led the companies to lower their expectations regarding the period ahead and to begin to postpone investments. All in all this has a dampening effect on economic activity in Sweden. High sovereign debts abroad affect Sweden As we have noted, the level of debt is high in the euro area and the United States. Following many years of budget deficit, what were in many cases already weak public finances were further undermined in connection with the financial crisis of 2008–2009. In 2009, the average budget deficit in the euro area amounted to 6.4 per cent of GDP. This figure fell to 6 per cent  5  See for example Jansen and Nahuis, 2003; Kremer and Westerman, 2004; and Beckmann, Belke and Kuhl, 2011. BIS central bankers’ speeches  7  in 2010 and is expected to be 4.4 per cent in 2011.
As Jordà, Schularick and Taylor (2011, p. 1) observe, it was “an historical mishap that just when the largest credit boom in history engulfed Western economies, consideration of the influence of financial factors on the real economy had dwindled to the point where it no longer played a central role in macroeconomic thinking.”  1  See for example Taylor (1998) and Bernanke (2004). BIS central bankers’ speeches  1  Few traces of the debate on leaning against the wind A few years before the crisis a debate had arisen on whether central banks should raise their policy rates to counteract the rapid increases in asset prices that had been observed in several regions. Should central banks, as it was often expressed, “lean against the wind” to “burst bubbles” on the asset markets? But this debate made little mark on practical policy. The dominant opinion at this time, among both researchers and representatives of central banks, was that the central banks should not try to take preventive action, but make do with “cleaning up afterwards” if a crisis did occur. 2 It was considered too difficult and too costly to use the policy rate for preventive purposes. Moreover, it was considered – possibly with Japan as the exception that proves the rule – that it need not be so difficult to clean up after a crisis.

4 -Greenwood Hanson Stein (2016), The Federal Reserve’s Balance Sheet as a FinancialStability Tool, Jackson Hole Symposium -Hamilton Harris Hatzius West (2019), The Equilibrium Real Funds Rate: Past, Present, and Future, IMF Economic Review Vol. 64, No. 4 -Hartmann Smets (2018), The first twenty years of the European Central Bank: monetary policy, ECB Working Paper Series -Holsten Laubach Williams (2017), Measuring the natural rate of interest: International trends and determinants, Journal of International Economics 108, S59–S75  Page 11 sur 11 -Monnet (2014), Monetary Policy without Interest Rates: Evidence from France's Golden Age (1948 to 1973) Using a Narrative Approach, American Economic Journal: Macroeconomics, Vol. 6, No. 4 (October 2014), pp. 137-169 -Monnet and Vari (2019), Liquidity Ratios as Monetary Policy Tools: Some Historical Lessons for Macroprudential Policy, IMF Working Paper 19/175 -Nakamura Steinsson McKay (2016), The Power of Forward Guidance Revisited, American Economic Review, Vol. 106, No. 10 -Orphanides van Norden (2002), The Unreliability of Output-Gap Estimates in Real Time, Review of Economics and Statistics 84(4), p. 569-583 -Rostagno et al. (2019), A Tale of Two Decades: the ECB’s Monetary Policy at 20, forthcoming -Stein (2012), Monetary Policy as Financial-Stability Regulation,” Quarterly Journal of Economics, 127, pp. 57-95. -Stein (2013), Overheating in Credit Markets: Origins, Measurement, and Policy Responses, Speech -Svensson (2017), Cost-benefit analysis of leaning against the wind," Journal of Monetary Economics, vol. 90(C), pages 193-213. -Woodford (2016), Quantitative easing and financial stability, Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol.
In concluding my remarks on reforms aimed at making future crises less likely, let me also mention proposals currently on the table for the establishment of a Convergence and Competitiveness Instrument, also known as “reform contracts”, within the EU budget. The proposal is essentially to create a special EU budget account supporting timely implementation of needed (and possibly unpopular) structural reforms following contractual arrangements between Member States and the Commission. A review of the compatibility of product and labour market structures in euro area countries with the requirements of EMU is also underway, which might provide further impetus to structural reforms in the euro area and make countries less vulnerable to future shocks. After describing reforms aimed at crisis prevention, let me now turn to crisis resolution mechanisms. Like fire safety restrictions and fire-fighters, the two elements are individually imperfect but should reinforce each other and work in symbiosis. The European Stability Mechanism (ESM) was created in order to provide financial assistance to euro area countries in financial difficulty. The ESM will function as a permanent firewall for the euro area with a maximum lending capacity of € billion. Euro area Member States can apply for ESM financing if they are in financial difficulty or their financial sector is a stability threat in need of recapitalization. ESM interventions are conditional on Member States first signing a Memorandum of Understanding containing a programme for the needed reforms or fiscal consolidation to be implemented in order to restore the financial stability.

Table 1 The costs of higher capital requirements Benefits  Costs  Required Marginal Probability  present value,  present value,  of 1% rise in risk weighted  % of GDP  % of GDP  capital ratio  Extra Months in the Average Gap between Crises from 25 years  (1) Baseline  55%  4.25  0.077%  5.9  (2) 30% Modigliani-Miller effect  55%  3.25  0.059%  4.5  (3) Tax offset  55%  1.67  0.030%  2.3  (4) More Substitutes to Bank Finance  55%  0.80  0.015%  1.1  (5) Less Sensitive Investment  55%  0.32  0.006%  0.4  Temporary Impact on GDP from Crises  20%  0.32  0.016%  1.2  How do these costs measure against the benefits of a more robust banking sector and a lower frequency of banking crises? I will make the same assumptions as in the FSR, namely that if a bank crisis occurs the initial impact is to reduce output by 10% of GDP. That is almost exactly the amount by which UK GDP is now below the level it would have reached had it continued on the trajectory it was on up to 2007. I assume that three quarters of this reduction lasts for just five years, but that the other 2.5% of lost GDP is gone forever.
Those as long in the tooth as me will know that, even in nominal terms, it costs less to buy a pair of jeans and a t-shirt today than it did thirty or forty years ago. The result is a significant contribution to real income growth over that period. In what follows I’ll flesh out these numbers a little further and say something too about their distributional effects. (One particular point in this respect is that the real income benefit of lower import prices is probably most marked for those at the lower end of the distribution.) I’ll mention the parallels, long recognised by economists, between the effects of growing trade and those of technical progress, and the role of the latter in rising inequality in the US. I’ll conclude with some remarks about the sort of things economists might have to think about as the UK leaves the EU. Globalisation and its effects on UK clothing Globalisation hasn’t occurred smoothly nor is there a single, discrete date at which it began. Its broad features are reasonably clear in Charts 1 and 2. Chart 1: Globalisation: a timeline  Source: NBER Macrohistory Database and Barclays calculations (Keller et al 2017)  1  D. N. McCloskey, "The Industrial Revolution in Britain 1780-1860: A Survey," in Roderick Floud and Donald McCloskey, The Economic History of Britain since 1700.

Charts 8a and 8b are interesting in this respect. Using numbers from the decennial UK census, they plot developments in regional labour markets since 1981 – in particular changes in aggregate employment and labour market participation – against the share of employment in clothing and textiles at the start of the period. Chart 8a: Regions with larger clothing sectors  Chart 8b: This was reflected in higher inactivity  in 1981 tended to experience slightly lower  rather than unemployment  growth in overall employment over following decade  Source: UK Census, Nomis  Source: UK Census, Nomis  There’s clearly lots of unexplained variation. Most of these regional differences are entirely unrelated to the particular starting conditions. Nor is there any correlation at all, it turns out, between the initial share of clothing and textile employment and what happens subsequently to the local rate of unemployment. 5  Samuelson (2004) points out that, if country A starts to experience rapid productivity growth in a good in which another country B has had a comparative advantage, and is large enough to affect global prices in that good, this can worsen B’s terms of trade sufficiently to reduce its net income. If (for example) B has traditionally been very good at making mousetraps, and A suddenly finds a new and cheaper way of making them, B could end up worse off (at least until it gets better at something else).
But the underlying picture is one of growth gradually picking up to around its historical average rate, reflecting continued recovery in investment and a higher contribution from net exports and, on the back of that, some modest strengthening in consumer spending as we go through next year. One should not, though, put too much weight on any single path, as the coloured fan in Chart 4, which covers nine out of ten of the possibilities as we see them, is pretty wide. That serves to emphasise the high degree of uncertainty at the current juncture. Those uncertainties include not only the spending of households and businesses here in the United Kingdom, but also the evolution of demand abroad. In particular, while the euro area overall has exhibited decent growth in recent quarters, the countries of the periphery are struggling with a mixture of fiscal, banking and competitiveness problems. There is a risk that this could lead to  2  Imports of aircraft were temporarily high in 2010 Q4 reflecting the forthcoming change in VAT treatment, but the data were still encouraging even after allowing for the resulting distortion to import growth in 2011 Q1. 2  BIS central bankers’ speeches  renewed banking sector turbulence and a hit to confidence more generally, with adverse consequences for us. Even though our central projection has growth returning to around its historical average rate, that would still leave the level of activity well below a continuation of its pre-crisis trajectory (Chart 5).

The issue, therefore, underscores the inadequate risk management, covering the entire process: from the lack of proper risk measurement, especially with regard to complex product, as well as liquidity risk, to inadequate risk management and control, and to micro-prudential risk-based supervision. In addition, there is now greater attention being paid to the importance of macroprudential approach, in recognition of the risk from procyclicality and interconnectedness of institutions, especially the large and highly complex financial institutions. Also, greater recognition is given to the problem of the unregulated shadow banking sector, like the hedge funds, which are also key in systemic risk process. All these issues pose a major policy challenge, as indeed the various working groups and committees of the BIS are now working on the guidelines, and on the key issues such as accounting, valuations, procyclicality, and adequacy of capital and provisions. In view of the depth of the current problem, and the fact that it may be quite sometime before the global standards on these issues can be settled, regulators, in my view, must be ready to take the needed action to ensure that we address these risks in our financial systems systematically. This is why Pillar II is all the more important, because the essence of Pillar II is to ensure that financial institutions have adequate risk management process and capital, commensurate with their risk profiles.
The average private lending rate increased by 0.09 percentage point from  2  BIS Review 38/2010  the third to the fourth quarter, but the December interest rate increase will probably only feed through in 2010. Weighted mortgage lending rates have increased by a quarter percentage point since the key rate was raised for the first time in October. The fall in business investment seems to be nearing an end. Information from the regional network indicates that investment in private services will pick up this year. Manufacturing enterprises in the regional network report that investment will fall between 2009 and 2010. Corporate credit growth is still on the decline, but Norges Bank’s fourth-quarter survey of bank lending showed that banks have eased credit standards for the corporate sector. Commercial building starts have picked up slightly since summer. Housing investment fell sharply between 2007 and 2009. Turnover of new homes has increased and house prices have risen markedly. Housing starts are expected to increase ahead. Household credit growth has been stable in recent months. Growth in private consumption increased through 2009 and growth is expected to continue. In spite of a lower interest rate level, the household saving ratio increased to a record-high level in 2009. This probably reflected high household debt levels with a need for some households to consolidate, and a large degree of uncertainty owing to prospects of higher unemployment and a fall in the value of housing wealth. At the same time, household real disposable income increased.

If economic developments are broadly in line with projections, a fiscal stance in line with the fiscal rule could result in a lower interest rate and a weaker krone than projected. The Government has estimated that the annual return on the fund will be around 4 per cent over time. The average real return since the management of the fund began is now 2.7 per cent, up from just 1 per cent a year ago. The figure reflects the recent recovery from the sharpest deterioration in capital markets since World War II. With an unchanged risk profile, the average return will most probably move back towards 4 per cent after a period. The investment strategy of the fund is built on its long-term investment horizon and substantial size. In 2009, we benefited from the long-term investment horizon. The return on the fund was 25.6 per cent in 2009, which is the highest return ever recorded. The fund’s long-term investment horizon enabled it to buy equities and maintain its positions in corporate bonds when other investors were forced to sell assets at low prices during the financial crisis. In June 2007, the Ministry of Finance decided to increase the allocation to equities from 40 to 60 per cent. This was achieved over the two following years when equities for more than NOK 1 trillion were purchased. The long period of phasing in purchases was profitable as the fund was able to exploit falling equity prices during the financial crisis.