samchain/econo-pairs-v1 huggingface dataset:
Lift-off was quickly aborted as the economy came back to earth with a bump. In trying to spring the interest rate trap, countries found themselves being caught by it. Why did this happen? One plausible explanation is the asymmetric behavioural response of the economy during periods of insecurity. Dread risk means that good news – such as oil windfalls – is banked. But it also means that bad news – 9/11, the Great Depression – induces a hunkering down. It risks shattering that half-empty glass. A rate tightening, however modest, however pre-meditated, is an example of bad news. Its psychological impact on still-cautious consumers and businesses may be greater, perhaps much greater, than responses in the past. Or that, at least, is what historical experience, including monetary policy experience, suggests is possible. Another way of illustrating this point is to imagine you were concerned with the low path of the yield curve and the limited monetary policy space this implied. And let’s say you were able to lift the yield curve to a level which, for the sake of illustration, equalised the probabilities of recession striking and interest rates being at a level at which they could be cut sufficiently to cushion a recession. With monetary policy space to play with, this might seem like a preferred interest rate trajectory. But it comes at a cost, potentially a heavy one. The act of raising the yield curve would itself increase the probability of recession.

This is around 0.2 percentage points higher than forecast in the Bank’s May Inflation Report. This pick-up in wage growth is welcome. Indeed, this rise is a necessary ingredient for getting inflation back to target in the period ahead. Equally, were wage inflation to continue to surprise to the upside as the labour market tightens, this could pose an upside risk to inflation, with corresponding implications for the MPC’s monetary policy stance. 8  8  See Bunn and Rostom (forthcoming). BIS central bankers’ speeches  It is important also, however, to place this wage news in context. This most recent upside surprise comes against a backdrop of wage growth having surprised to the downside for much of the past two years. Up until last month, wages had surprised to the downside in 11 of the past 18 months. That has left the level of regular pay in the economy 2% lower than we expected 18 months ago, even with the recent news. Second, one explanation for the recent weakness of wages has been the compositional effects of a greater number of lower-skilled, lower-paid workers entering the job market. This has clearly had some, probably temporary, depressing effect on wage growth. Over the postcrisis period as a whole, however, compositional effects have not depressed wages. Rather, they have inflated them. Without composition effects, the level of wages today would be around 1% lower, not higher.
At this point, global perceptions regarding the persistency of the increases in agricultural commodity prices in the medium term have become stronger. In this conjuncture, the analysis of the forecasts for world food prices and their impacts on domestic food prices bears great importance. In this respect, we included the summary of a particular study in the Inflation Report. The said study analyzes in detail the price developments observed in food products, determines their relative impacts by excluding the determinants of domestic food prices and accordingly makes assessments for the future. As stated in the study, the reinforcement of global perceptions regarding the persistency of the increases in agricultural commodity prices in the medium term indicates that upward risks on domestic food prices and especially on processed food prices will continue in the foreseeable future. In this framework, we revised our forecasts for medium term inflation to incorporate more conservative assumptions on food prices and we have raised our assumptions for food inflation to 13 percent for the year 2008 and 8 percent for the year 2009. These changes have led to upward revisions in our inflation forecasts, by about 1.2 points for 2008 and 1.1 points for 2009. The assumption on oil prices in the January Inflation Report stood at USD 85 per barrel. However, oil prices averaged about USD 100 in the first quarter of 2008. Considering the most recent developments, we have revised our assumption for oil prices to USD 105 per barrel.

10  BIS Review 62/2008  Figure 14: Inflation and Output Gap Forecasts Forecast ForecastRange* Range*  Medium MediumTerm TermTarget Target  Output OutputGap Gap  Uncertainty UncertaintyBand Bandforfor2008 2008  1212 1010 88 Percent Percent  66 44 22 00 -2-2 -4-4 2011-I 2011-I  2010-IV 2010-IV  2010-III 2010-III  2010-II 2010-II  2010-I 2010-I  2009-IV 2009-IV  2009-III 2009-III  2009-II 2009-II  2009-I 2009-I  2008-IV 2008-IV  2008-III 2008-III  2008-II 2008-II  2008-I 2008-I  2007-IV 2007-IV  -6-6  Source: CBT *The shaded region indicates the 70 percent confidence interval for the forecast. Distinguished Guests and Members of the Press, Supply shocks have turned out to be more persistent than expected, increasing the risks to the second round effects and necessitating a significant upward revision in our inflation forecasts. Accordingly, monetary policy has already assumed a more cautious stance in order to eliminate the materialization of potential second round effects. Ensuring a steady decline in inflation will likely require tight monetary policy to be maintained for an extended period. Even then, the earliest time for reaching the 4 percent medium term targets is likely to extend beyond two years. However, this does not mean that the Central Bank will implement a looser monetary policy in the forthcoming period. On the contrary, the forecasts that I just presented are based on a tighter monetary policy stance compared to the previous period.
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)).

This, together with the difficulties of the latest round of budget and debt‐limit negotiations, shifted the consensus to postpone the expected date of the beginning of tapering. Recent figures indicating a recovery of employment in October stronger than expected have led some to bring forward again their forecasted date of tapering. Developments in coming weeks will be crucial to assess whether recent data mark a change in tendency or a temporary phenomenon. The question of how the reversal will occur is the hardest to answer. If everything goes as planned, the withdrawal of the monetary stimulus would be gradual and related to improved economic conditions in the US. But, the significant reaction of markets to the announcement  4  A few papers trying to quantify the impact of various macroprudential policies include Lim et al. (2011) and Tovar et al. (2012). 5  See for instance the article by Rey (2013) and the presentation by Smets (2013) at Jackson Hole. BIS central bankers’ speeches  3  of the possibility of reducing the speed of purchases, gives us some reason to worry about the ability of authorities to guarantee a smooth transition to a scenario of normal monetary conditions. Financial markets are large, and even the Federal Reserve may have some transitory trouble taming them.
We use weights based on the American Community Survey to construct summary statistics for our public releases. The survey consists of a core monthly module on expectations about macroeconomic and household-level variables and an additional quarterly module that allows us to address special topics. Our core module contains questions about survey respondents’ expectations for inflation, wage growth, home prices, various commodities, household income and spending, taxes, government debt, credit access, and job search. So far, quarterly modules have included questions on housing and employment, work history, job search, retirement, financial literacy, consumption and savings behavior, student loans, and various field experiments. These quarterly modules are developed by Federal Reserve staff in collaboration with academic consultants and the Nielsen team. First, however, new questions are evaluated using cognitive interviews, and every new module is pilot-tested before being put into the field. The Bank began publishing the results of the Survey in January 2014, after having fielded the Survey since December 2012. We introduced it through a series of posts on our Liberty Street Economics blog; eventually, after a suitable embargo period, we plan to release to the public all the micro data from the Survey. Approach to and benefits of eliciting probabilistic beliefs As I mentioned earlier, an important innovation of our Survey is that, in addition to asking the respondent for a point forecast, it uses probabilistic questions to elicit a respondent’s density forecast.

More specifically, when a respondent assigns a positive probability to three or more bins, we assume an underlying generalized beta distribution; and for fewer than three bins, we assume a triangular distribution. An example of such a fit is shown on Slide 3. 2  BIS central bankers’ speeches  Our findings over the past five years, based on different samples and different survey platforms, indicate that individuals are as willing and able to respond to well-written probabilistic questions as they are to traditional attitudinal questions on the same subject. Moreover, they do so sensibly, with responses to probabilistic questions having internal consistency and measurement reliability. The uncertainty expressed in consumers’ density forecasts is reliably related to other measures of uncertainty. For example, individuals who express higher levels of uncertainty in their subjective probability distribution are more likely to report a range when they are originally asked for their point forecast, and the width of this self-reported range is positively correlated with measured uncertainty. In the case of inflation, we find that uncertainty about future inflation is negatively related to self-assessed responsibility for investment decisions, planning horizons for financial decisions, and the respondent’s performance on a financial literacy measure. In addition to providing a measure of uncertainty, an important advantage of density forecasts over point forecasts is that they remove ambiguity about which (if any) measure of central tendency an individual’s point forecast corresponds to.
The savings banks will be financially restructured in the coming weeks. The causes Earlier in my remarks I told you how the banks failed. Does this also tell us why they failed? I think it does so only partly. The interplay between trust, liquidity and solvency is complicated  7  Central Bank of Iceland (2009). Financial Stability 2009. 26 October 2009 (pp. 18–19, 68–70). 8  Financial Stability 2009, 22–37. 9  IMF (2008). “Iceland: Request for Stand-By Arrangement – Staff Report”, IMF Country Report No. 08/362, November 2008. IMF (2009). “Iceland: Staff Report for First Review under Stand-By Arrangement and Request for Extension of the Arrangement, Waivers of Nonobservance of Performance Criteria, and Rephasing of Access”, IMF Country Report No. 09/306, October 2009. For further information about the IMF Stand-By Arrangment and the economic programme of the government, please refer to the web sites of the Central Bank of Iceland (http://www.sedlabanki.is/?pageid=186&dt_date=2009-01-01), the Prime Minister’s Office (http://eng.forsaetisraduneyti.is/), and the International Monetary Fund (http://www.imf.org/external/country/isl/index.htm). See also Central Bank of Iceland (2009). Financial Stability 2009. 26 October 2009 (pp. 71–75). 8  BIS Review 9/2010  when it comes to banks. Banks fail because they lose trust. That loss of trust might not be warranted, in which case the bank will face a liquidity problem. However, it might still fail if it is not supported by a credible lender of last resort, or if the liquidity problem lasts long enough. The line between liquidity and solvency can be a thin one.

Instead, the Government, on the advice of the Central Bank, announced on 29 September that it was taking a 75% equity stake in Glitnir valued at € m. This implied a big fall from what such a stake was valued at in the market the week before. In the following week, the equity price collapsed further, ending the week 75% below its value at the end of the preceding week. This action did not boost market confidence in the Icelandic banking system. On the contrary, it intensified the run. On the following day, both the sovereign and the banks were  2  Baba, Naohiko, Frank Packer and Teppei Nagano, (2008). “The spillover of money market turbulance to FX swap and cross-currency swap markets”, BIS Quarterly Review, March 2008, 73–86; Baba, Naohiko, and Frank Packer, (2008). “Interpreting deviations from covered interest parity during the financial market turmoil of 2007–08”, BIS Working Papers, No. 267. See also Box III-1, “The recent turmoil in the Icelandic foreign exchange swap market” in the Central Bank of Iceland Monetary Bulletin 2008/1, pp. 26–29. 4  BIS Review 9/2010  downgraded by two notches, followed by widespread margin calls and closing of credit lines. The foreign deposits that had helped to alleviate the foreign liquidity squeeze experienced outflows. And the equity loss involved in the Glitnir takeover created a domino effect within the Icelandic financial system.
Turning to the monetary analysis, broad money (M3) continues to expand at a robust pace, with an annual rate of growth of 4.7% in February 2017, after 4.8% in January. As in previous months, annual growth in M3 was mainly supported by its most liquid components, with the narrow monetary aggregate M1 expanding at an annual rate of 8.4% in February 2017, unchanged from the previous month. The recovery in loan growth to the private sector observed since the beginning of 2014 is proceeding. The annual growth rate of loans to non-financial corporations declined to 2.0% in February 2017, from 2.3% in the previous month, while the annual growth rate of loans to households remained broadly stable at 2.3% in February. At the same time, the euro area bank lending survey for the first quarter of 2017 indicates that net loan demand has increased and bank lending conditions have further eased across all loan categories. The pass-through of the monetary policy measures put in place since June 2014 continues to significantly support borrowing conditions for firms and households and credit flows across the euro area. To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need for a continued very substantial degree of monetary accommodation to secure a sustained return of inflation rates towards levels that are below, but close to, 2% without undue delay.

Thomas Jordan: What are the consequences of the war in Ukraine for the SNB's monetary policy? Speech by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the 114th Ordinary General Meeting of Shareholders of the Swiss National Bank, Berne, 29 April 2022. * * * Madam President of the Bank Council Dear Shareholders Dear Guests I would like to warmly welcome you all to our Annual General Meeting, and I am delighted that this year we are able to meet in person again. The geopolitical situation has changed fundamentally in the past few months. Russia’s attack on Ukraine has shaken us all. Our thoughts are with the victims of this terrible war. Considerations of the economic consequences pale by comparison with this suffering. Nevertheless, such deliberations are also important for the citizens of Switzerland, and the Swiss National Bank is therefore working intensively on addressing the impact the war will have. On the one hand, we have to properly contextualise the immediate economic effects. On the other hand, we also have to address questions pertaining to the longer term. I will begin my speech by looking at the closely interconnected global economy as we knew it until just recently, the gains in prosperity it brought, and what it meant for monetary policy. I will go on to explain how the consequences of the war that can already be felt are influencing our current monetary policy.
I have myself been the governor of the independent Banque de France during these ten years. The independence was granted in January 1994, five years before the euro. During these five years I was particularly proud that our primary goal, price stability, was reached in line with our definition – below 2% – and was fully compatible with price stability in Germany during the same five-year period. It can be said that, with the creation of the euro, the stability culture has been “Europeanised” and given the legal face of an international treaty European stability consensus The primary mandate of price stability and the independence of central banks as laid down in the Maastricht Treaty, are an expression of a stability consensus which has grown in Europe – even worldwide – in recent decades. There exists today a general awareness of the fact that stable prices are indeed a fundamental condition for sustainable economic growth and employment. The priority for price stability as the primary objective of monetary policy as well as the independence of the ECB enjoy broad support from the people of Europe. In surveys of citizens throughout the euro area, an overwhelming majority regard price stability as an important goal. An overwhelming majority believe it important that the ECB and the Eurosystem are independent of governments in order to achieve this goal. This support from our fellow citizens in the Euro area matters greatly to the ECB.

In other words, economic agents and financial market participants expect the ECB to ensure price stability over the medium and long term whatever the amplitude of the short-term impact of the various shocks it has to cope with. They trust our commitment to stability. This is expressed most clearly by the issue of eurodenominated bonds with a maturity of 30 and even 50 years, the yields of which stand at a remarkably moderate level. For example, a 50-year French government bond maturing in 2055 currently yields 4.1%. This implies confidence into the stability of the euro – in its function as a store of value – extending beyond more than one generation. Cash changeover and price increases I know that in Germany and in other countries in the euro area the introduction of euro cash in 2002 was “associated” with price increases. Was the euro “a Teuro”? There were some price increases in the course of the cash conversion. The statistics office of the European Union – Eurostat – estimates that the cash conversion added between 0.12% and 0.29% to the inflation rate in the euro area in 2002. This was overall small in 2002 and negligible over the ten years of the euro. Also to be noted is the discrepancy between the “felt” inflation and the actual, statistically measured inflation. This discrepancy cannot be attributed to a measuring error in the consumer price statistics. These statistics are of high quality.
How do you view them as an alternative? A: I would prefer not to make any comments on the political situation in Greece. I do believe, however, that the appearance of protests in countries subject to financial assistance programmes [implemented by the Troika] is the reflection of the huge demands that have been placed on the population. Being in a democracy means that people have the right to voice their complaints. Yet it is also a warning to leaders that when an economy is undergoing reform, sharing responsibility and effort is key. It is key to both the economic efficiency and political sustainability of the reforms. Social protests are there to remind us that we cannot reform an economy by placing all the demands on workers and the most fragile parts of society. Q: Can the euro survive without debt mutualisation? A: The debate on the future of the euro should not be centred on instruments such as mutualisation. This is in my view the tail that wags the dog. The question to consider is to what extent we should share risk and sovereignty in order to make monetary union sustainable. Since the beginning of the crisis we have made a lot of progress in creating various instruments to establish effective solidarity within the euro area, as well as governance that establishes responsibility at a national level. The process is not yet completed.

The LIFI area is currently is responsible for roughly the top 23 foreign firms based here in New York with the largest U.S. presence (outside of the four firms that are covered in our Complex Financial Institutions portfolio); and, the RCFI unit is responsible for the remaining large group of smaller foreign firms. Our rationale for making this change was three-fold: First, we wanted to better tailor our supervisory approaches to the firms in each of these portfolios. •  In this regard, the LIFI portfolio approach will use a combination of on-site and offsite monitoring over the course of the year, as well as examinations – but the program will evolve over time as the rules are finalized for applying enhanced prudential standards for FBOs. •  The RCFI approach will largely be point-in-time examinations, using, where possible, a more streamlined process, more off-site analysis, and continued coordination with our colleagues at the other supervisory agencies. Second, we wanted to leverage the portfolio approach to ensure better dialogue with supervised firms, as well as to develop better cross-firm metrics and benchmarks that we can use to evaluate firms and to provide more robust feedback on key issues. 6  BIS central bankers’ speeches  And, third, it provides an opportunity to realize efficiencies across our supervisory activities, with similarly sized (and similar complexity) organizations examined by a common core of examiners; this also gives us more targeted training and development for our staff.