samchain/econo-pairs-v1 huggingface dataset:
6  BIS Review 25/2002  The EU and EMU  EU membership is one of the structural factors that are assumed to have increased competition in recent years. The idea in creating the EU's common market was to abolish the legal and administrative impediments to trade and thereby increase competition between and within the member states of the EU. This, together with better usage of economies of scale, would cause price levels to converge. It is now 9 years since the common market came into force and we can conclude that the price differences between the member states still remain. There are also considerable differences between the USA and the EU with regard to price spread. Almost one-third of all brands has a price spread of between 60 and 100 per cent within the EU. The corresponding figure in the USA is 9 per cent. One reason for this is that even if the legal trade impediments have been largely removed, there still remain a significant number of non-tariff trade barriers in the form of, for instance, various standards that segment the national markets. Transport costs and differences in consumer preferences are also factors that counteract market integration. A clear sign of market segmentation is that the price differences between the countries are significantly larger than within the countries. The EU/EEA countries trade almost 90 per cent with one another. Internal trade is therefore approximately as important or more extensive here than it is in the USA.

As a result, a growing number of places in the region have either recovered or are close to recovering the jobs that were lost during the Great Recession. More troubling, however, is that Puerto Rico’s economy remains exceptionally weak; activity and employment on the Island continue to decline. Our economists will elaborate on these trends this morning. Private for profit institutions in the higher education landscape The important role of post-secondary education is undeniable given the key role that human capital plays in economic growth. However, the higher education landscape comprises different types of post-secondary institutions that provide different educational experiences. One such group of institutions – private for-profit institutions – have progressively become more visible in the U.S. higher education market. For-profit institutions and their growth in the market for student loans and federal need-based aid is the subject of the special topic in today’s briefing. Analysis done here at the New York Fed reveals that enrollment in for-profit colleges showed explosive growth nationally during, and for some time after, the Great Recession. Interestingly, this growth in enrollment has leveled off perceptibly as the economic recovery has taken hold. These patterns suggest that workers who were displaced from their jobs during the Great Recession chose to enroll in two-year and less-than-two-year colleges, mostly in for-profits but also in public community colleges. Now, with improved labor market conditions, individuals have less reason to get a short-term degree or may have returned to the labor force. Stark patterns are also observed in the market for student loans.
A gradual recovery should commence in the second part, with export growth benefiting from a strengthening of global demand and domestic demand being supported by our accommodative monetary policy stance. Furthermore, the improvements in financial markets since July last year and the continued implementation of structural reforms should work their way through to the economy. At the same time, necessary balance sheet adjustments in the public and private sectors, and the associated tight credit conditions, will continue to weigh on economic activity. This assessment is also reflected in the March 2013 ECB staff macroeconomic projections for the euro area, which foresee average annual real GDP growth in a range between –0.9% and –0.1% in 2013 and between 0.0% and 2.0% in 2014. Compared with the December 2012 Eurosystem staff macroeconomic projections, the ranges have been revised slightly  BIS central bankers’ speeches  1  downwards. The revision for 2013 mainly reflects a more negative carry-over effect from the outcome for real GDP in the fourth quarter of 2012, while the projected path of the recovery has remained broadly unchanged. The Governing Council continues to see downside risks surrounding the economic outlook for the euro area. The risks relate to the possibility of weaker than expected domestic demand and exports and to slow or insufficient implementation of structural reforms in the euro area. These factors have the potential to dampen the improvement in confidence and thereby delay the recovery.

Jean-Pierre Roth: Impact of the global crisis on Switzerland Introductory remarks by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Schweizerisch-Deutscher Wirtschaftsclub, Frankfurt am Main, 2 March 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  What started as a financial crisis has now become a global economic crisis. Although the Swiss economy was in a very sound state before the crisis set in, Switzerland’s standing as a financial centre, its real economy and its public finances have all been strongly affected by the global turmoil. Recovery will depend largely on the development of the US economy. Despite having reached worldwide proportions by now, the crisis was not triggered by globalisation itself. Rather, it is the result of a lack of discipline in the industrialised nations. Monetary policy today must contribute to the stabilisation of the financial system and the real economy without losing sight of its principal task, which is to maintain price stability. BIS Review 24/2009  1
The decline in production and investments will be confining the opportunities for an upturn in income. Consumer demand will be shrinking. The measures implemented by the Government and the Bank of Russia will support the economy, and specifically the most affected industries. Economic growth in 2021–2022 will largely be recovery-type. According to our forecast, GDP will expand by 3–5% in 2021 and by 1.5–3.5% in 2022. GDP growth will be promoted by a further implementation of national projects. However, our baseline forecast factors in only the already effective budget support measures. An upturn in the economy and domestic demand will also be driven by the easing of monetary conditions resulting from the monetary policy pursued. This will support lending, and its growth rate will rise from 3–8% this year to 6–11% in 2021–2022. The lending potential will also be maintained owing to the regulatory easing and the expansion of the Bank of Russia’s specialised refinancing instruments. According to our estimates, the easing of monetary policy is needed to maintain annual inflation close to 4% over the forecast horizon. The slump in domestic and external demand this year will be considerably containing inflation, which induces the risk of its substantial deviation downwards from the target in 2021 and over a medium-term horizon if no additional monetary policy measures are introduced. The disinflationary pressure of weak demand will offset the effect of temporary proinflationary factors, that is, the ruble weakening and the observed elevated demand for individual products, already this year.

While the IMF used to be the guardian of the system of fixed exchange rates established in Bretton Woods in 1944, it now works to promote international financial stability. In this role, it oversees the overall economic and financial position of its member countries. More than ever before, its activities are primarily aimed at crisis prevention. BIS Review 111/2006  1
This was an institutional attempt to avoid the temptation to stoke the economy in the short-term, and to anchor inflation expectations in the longer-term, thereby building policy credibility. With these new policy powers came, reasonably enough, new responsibilities for central banks. For the first time in their histories, central banks needed to be far more open and transparent about their policy targets and actions. Why? Because it was through greater transparency that policy suspicions among the public could be allayed, thereby helping anchor inflation expectations in the economy. As unelected technocrats acting on society’s behalf, operational independence also called for new means of ensuring central banks were sufficiently accountable to society. Holding central banks’ feet to the flames called for greater public transparency and greater public scrutiny than ever previously. Trust in central banks could not be endowed by statute. It needed instead to be earned through experience and societal scrutiny. These forces brought about a revolution in central bank practices regarding transparency and accountability. Over the course of the past century, the number of Bank of England appearances before Parliament has risen around 20-fold; the number of publications issued has risen around 600-fold; and the number of words uttered has risen around 1,000-fold. You don’t need Tracy Chapman to tell you I’m talkin’ ‘bout a revolution. Elsewhere around the world, the pattern has been much the same. We have seen a rising tide of speeches, publications and parliamentary appearances by central banks.

The architects of this currency separation deserve great recognition, because everything began to return to normal soon afterwards and the previous uncertainty quickly faded away. It is no secret that they were inspired primarily by Rašín’s separation and its success, and they themselves later became a source of inspiration for currency separations in other economies gaining independence. All this tells us that the Czech nation is reasonably good at running its own macroeconomic, monetary and financial affairs. It has never had to resort to an exchange rate arrangement such as a currency board, and it has enjoyed the benefits of relative economic and monetary independence. Although at times the exchange rate of the koruna has been a source of domestic economic volatility, at other times it has done a great job of absorbing external shocks. Until quite recently, we were also using the koruna exchange rate as an unconventional monetary policy instrument to help us achieve the inflation target. Our ability to conduct our own monetary policy successfully is one reason why the Czech Republic is not currently seeking to adopt the euro any time soon. To sum up, the past 100 years have not been a series of random economic events. Despite all the discontinuities, there has been some continuity. In the same way that we inherit various physical and personality traits from our forebears, economists learn their craft from those that came before them and pave the way for those that come after. I am sure this conference will bear me out on that.
The worst-in-a-lifetime financial crisis of the past few years is exhibit one. It is unlikely to be the last. Yet the history of political and economic progress offers a clue to solving these problems. This has relied heavily on long-lived, far-sighted institutions which are able to tackle the problems complex, integrated, information-rich societies throw up. Post-crisis financial reform has recognised that, giving system-wide regulatory responsibilities to a set of arms-length, long-lived institutions. There are many other areas of public policy where long-tailed risks loom large – pandemics, cyber risks, trade disputes, carbon emissions. Left to their own devices, societies may underinsure against these tail risks too. That is why institutions matter, now more than ever. They explain why nations failed in the past. They may be even more important in helping them succeed in the future. 5  See FSB (2011), “Macroprudential policy tools and frameworks”. BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  References Acemoglu, D and Robinson J (2012), “Why nationals fail. The origins or power, prosperity and poverty”. Profile Books. Acemoglu, D, Ozdaglar, A and Tahbaz-Salehi, A (2013), “Systemic risk and stability in financial networks”. NBER Working Paper No. 18727. Aikman, D, Haldane, A and Nelson, B (2010), “Curing the Credit Cycle”, Columbia University Centre on Capitalism and Society Annual Conference “Micro foundations for Modern Macroeconomics” New York.

This is why in the more recent period, as a central bank, we strive to gather as much as possible micro information, for the corporate sector in particular. One of the important steps was the launch of the first Survey on Wage and Price Dynamics, similar to the survey conveyed for the euro area, which provided one of the most comprehensive overviews on the behavior of corporates in terms of wage and price adjustments. The results of the survey, and the subsequent research, gave valuable information. It pertains to information on the nominal and real wage rigidities, and the way the corporate sector adjusts  BIS central bankers’ speeches  3  its balance sheet in response to different shocks. All of this supports the understanding of the monetary policy transmission and calibrating economic models that incorporate heterogeneous agents. One of the lessons from the crisis was that not many central banks had enough granular data on the corporate sector. As mentioned, granular data serve as an important analytical tool for assessing the potential vulnerabilities in the economy, and thus as an important input in the monetary and financial analysis of the central bank. We recognized the importance of the corporate sector data quite early, in the context of detected financial stability risks in particular. Aggregate balance sheets of the Macedonian corporate sector have been transmitted from Macedonia’s Central Registry to the central bank since. Yet again, it was recognized that the aggregation loses information, and a more disaggregated approach should be employed.
Lars Heikensten: Thoughts on how to develop the Riksbank’s monetary policy work Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at the Swedish Economics Association, Stockholm, 22 February 2005. *  *  *  Introduction Allow me to begin by thanking you for the invitation to once again visit the Economics Association and speak about monetary policy. Since I was here a year ago there has been a relatively lively debate, by Swedish standards, on monetary policy. Some commentators have focused on the currently low inflation rate, but what has really added fuel to the debate is the rise in unemployment that has occurred despite record-low interest rates and strong growth. Other participants have centred on the low interest rates, voicing concerns over their implications for credit growth, household debt and the housing market. I don’t intend to enter into this discussion today, however. Instead, I would like to take advantage of the opportunity to have a more fundamental discussion about the Riksbank’s monetary policy framework, its monetary policy analysis and the possibilities to improve the material underpinning our decisions. I shall describe the changes that we are planning to make to our methods. At the same time I should stress that it is not a question of changing the Bank’s monetary policy strategy.

The Riksbank’s inflation targeting policy today An explicit target and a clear intellectual framework The Riksbank’s decision in 1993 to let its policy be guided by an inflation target was a fairly new approach at the time.1 The idea had only really been tried in three other countries before (New Zealand, Canada and the United Kingdom). An inflation target has considerable advantages over the methods of conducting monetary policy under a floating exchange rate that have been tried before, e.g. a target for the growth rate of money. Communication becomes simpler when the operational target agrees with the final one. In addition, an explicit target facilitates a stabilisation of inflation expectations and enables policy to be evaluated. The inflation target also has the advantage of capturing all important variables in one single variable. The inflation forecast is influenced not only by interest rates but also by an assessment of credit developments, the exchange rate and other factors of significance to demand. The monetary policy objective laid down by Parliament is to maintain price stability. The Riksbank has operationalised this objective in the shape of a quantitative target for the inflation rate: the annual increase in the consumer price index, CPI, should be 2 per cent. Around this target is a tolerance band of +/- 1 percentage point, the purpose of which is both to make clear that inflation from time to time will deviate from 2 per cent and that the Riksbank’s ambition is to limit such deviations.
In order to prevent an appreciation, the central bank has to intervene and buy foreign exchange. This leaves more time for capital inflows, and the accumulated capital inflow may grow. The economy starts becoming overheated, asset prices grow, and bubbles may develop. In order to prevent the situation from becoming more problematic, the central bank may consider what the IMF calls capital-flow management measures (CFMs), including capital controls (residency-based CMFs) (IMF 2011b). The authorities may also consider a fiscal contraction and financial-stability measures to improve the situation. This is a highly stylized and very simplified thought experiment. Still, I think it conveys an important insight, namely that a substantial part of the problem is due to the central bank’s unwillingness to accept the nominal and real appreciation, even though this appreciation is a natural equilibrium response to the lower world interest rate. Are the reasons for that unwillingness so important that they take precedence over the problematic consequences?7 More expansionary monetary policy in the U.S., for instance in the form of lower long rates due to LSAPs, tends to depreciate the dollar, all else equal. Does this mean that the U.S. is conducting a beggar-thy-neighbour policy that hurts other countries? I do not see it this way. 7  The policy response to recent capital inflows to emerging-market economies is further discussed in the IMF staff framework for policy advice on managing capital inflows, IMF (2011b).

These longer interest rates have an impact on the economy through capital costs, the stock market, the exchange rate, and other asset prices (Blinder 1998, D’Amico, English, López-Salido, and Nelson 2011, Woodford 2005). It would therefore seem that publishing a policy-rate path would be the most direct way to affect interest-rate expectations, especially since central banks should have better information about their own intentions than anyone else. Publication of the central bank’s assessment of the future path for the policy rate is thus a separate tool in the monetary policymaker’s toolbox. This tool can be particularly useful 6  BIS central bankers’ speeches  when the policy rate has reached the effective zero lower bound, and there is a need for even more expansionary policy. Given this, it may seem a mystery why still so few central banks choose to publish a policy-rate path, when an increasing number of central banks are publishing forecasts of inflation and the real economy. I welcome very much that “[t]he FOMC continues to explore ways to further increase transparency about its forecasts and policy plans” (Bernanke 2011a). Global interest rates and emerging-market capital inflows Emerging-market economies have been subject to increased inflows of foreign capital over the last few years, and some emerging-market policymakers have expressed concerns about the related risks of bubbles and other negative effects.
At the Bank of England, one of the questions we now more or less routinely ask in our MI work goes along the lines of “is the Street and/or is the fund community short volatility /gamma/vega in a big way  3  ‘The dynamics of US dollar interest rate adjustment’, Financial Stability Review, Issue 15, December 2003, page 22. 4  ‘Structured notes and the US dollar/yen exchange rate’, Financial Stability Review, Issue 14, June 2003, page 43. BIS Review 50/2005  3  in any particular market?” This is discussed further in the latest edition of the Bank of England’s Financial Stability Review, which is published next Monday. Regulators can put any general information gleaned from MI alongside their more granular sources on the positions of firms. A risk properly understood is, I hope, a risk that can be managed effectively. And so my analysis of the impact of options hedging on market dynamics does not cancel out the benefits that derivatives can potentially bring. For the reasons described earlier, the plugging of ‘missing markets’ is something to welcome. Innovation, competition, and risk management That so many markets are no longer ‘missing’ owes something to innovation in the wholesale financial services industry. The underlying forces driving innovation seem to be powerful, and indeed perhaps self-feeding. They may also give rise to some risk management challenges. One possible story – there are others – would go along the following lines. Core wholesale markets have become more efficient.

P M W Tucker: “Where are the risks?” Speech by Mr P M W Tucker, Executive Director and Member of the Monetary Policy Committee of the Bank of England, at the Euromoney Global Borrowers and Investors Forum - remarks to the session “Where are the risks?” 1, London, 23 June 2005. * * * Central bankers are fond of discussing myriad uncertainties in the global macroeconomic and financial environment. Yet judging by the level of implied volatility, derived from option prices, on a wide range of asset classes, the market perceives uncertainty as fairly low. And, even after the recent adjustment, credit spreads across a wide range of instruments suggest that the premium charged for risk has fallen over recent years. This, all in an environment where long-maturity risk-free forward rates – real and nominal – are unusually low. It is hard to know quite what to make of this, but it forms an important backdrop to the few remarks I want to make today. For this audience, I think the interesting question is not whether or not risk will crystallise, as in one form or another risks crystallise every day. Rather, the important question is whether, in the event of nasty shocks, our capital markets can absorb them or whether they have developed characteristics which may, as some suggest, leave them vulnerable. Or, more constructively, what risk managers – and the authorities – might usefully monitor to help contain any such risks. It’s hardly a new question.