samchain/econo-pairs-v1 huggingface dataset:
This process too can have contributed to a better relationship between inflation and growth although it is difficult to prove that this is the case. However, I am to say the least doubtful about a new economy in the sense of new technology leading to a sustainable increase in productivity. Wage formation - a challenge The strong upswing the Swedish economy is now undergoing is borne up both by domestic and international demand. Private consumption is expanding rapidly, at the same time as export is recovering and the public sector is beginning to demand labour again. In the present situation, it is considered that there are unused resources in the economy, but when growth increases the use of resources and inflationary pressure will naturally also increase. As has been said, the Riksbank must assess how strong growth in demand can be permitted without inflationary pressure compelling interest rate rises. A current theme is the discussion on changes in the relationship between growth and inflation, which I have taken up in general terms. Another very important part in the inflation process is wage formation and I find here that it is justified to give prominence to the risk that evident imbalances between different categories of wage earners can lead to the positive development we are now seeing being prematurely interrupted. The collective agreements that have recently been concluded do not give any particularly great cause for concern. Wage increases have been around 3% per year.

A comparison with our European neighbours, which share the same social model, also points to some areas where  Page 15 sur 15 our public costs appear to be significantly higher: certain social benefits, economic aid – including tax credits – and the presence of multiple layers of local and regional authorities. None of the issues I have brought up here are easy. But everything is possible, and most of it depends on us. It doesn’t depend on anyone else, on globalisation, or even on Europe. A reform drive is guaranteed to produce results, as long as it is comprehensive, long-lasting – effective implementation over several years counts for more than the initial announcement – and fair. The gains then benefit everyone, and first and foremost those who are out of employment today and the most disadvantaged, who must be assured of a national solidarity that is finally financed over the long term. Our challenge is thus to finally project ourselves once again beyond the very short term. To conclude with Henri Bergson: "To act freely is to retake possession of oneself; it is to place oneself back in pure duration ". Good luck to our dear country, and thank you for your attention. I would like to thank Antonin Bergeaud, Marion Cochard, Marie Delorme, Antoine Devulder, Matthieu Lemoine, JeanFrançois Ouvrard, Katja Schmidt and Thomas Zuber for their contributions to this speech.
But the krone exchange rate also shows monthly and yearly fluctuations. The krone was strong towards the end of the previous cyclical expansion, but depreciated when interest rates declined in 2003. Thereafter, the krone appreciated again as growth in the Norwegian economy recovered. Over the past two years, the krone has appreciated by close to 5 per cent. Even though the krone has appreciated, inflation has picked up and is now fairly close to 2.5 per cent. While different measures of inflation as recently as last year were below 1½ per cent, the same measures are now between 2.1 and 3.3 per cent. The rise in the consumer price index (CPI) reflects the increase in electricity prices. Underlying inflation has also increased and is now assessed to be between 2 and 3¼ per cent. Prices for domestically produced goods and services are rising at a particularly fast pace. At the same time, prices for imported consumer goods are no longer falling. Higher inflation is expected one to two years ahead. BIS Review 45/2008  3  At the same time, growth in the Norwegian economy is strong. An ample supply of labour will allow growth in the Norwegian economy to hold up for a period ahead. Capacity utilisation is nevertheless likely to decline. Weaker growth in the world economy may have an impact on developments in the Norwegian export industry, which may gradually spill over to other business sectors in Norway.

The economic situation Since the mid-1990s, inflation in Norway has been low and stable and it has been fairly close to, but somewhat lower than, the target of 2.5 per cent, unlike the situation in Norway in the 1970s and 1980s when inflation was high and showed wide fluctuations. The Norwegian economy has on the whole also exhibited solid growth since the beginning of the 1990s, despite a mild downturn in 2002 and into 2003. Over the past four years, the mainland economy has been in a strong upturn, with average annual growth well above 4 per cent. Preliminary accounting figures suggest that growth was particularly strong in 2007. Information from Norges Bank’s regional network also indicates that growth was strong in 2007, but that it slowed somewhat towards the end of last year. Employment has risen sharply over the past two years. In both 2006 and 2007, the number employed increased by over 3 per cent. The number employed increased by 93 000 between 2006 and 2007, the highest increase for decades. Employment growth has partly been offset by a decline in unemployment and an increase in the labour supply, as a result of increased labour participation among the existing population and labour inflows. Unemployment has not been as low since the last half of the 1980s, and the number of vacancies is record high. The labour market is tight. The present economic expansion differs from previous upturns in that inflation has remained low so far despite strong growth and increasing capacity utilisation.
If the banking system has access to a large supply of unsecured credit from the central bank or other authorities, this may create problems in a crisis. The authorities will naturally have to place considerable emphasis on their own creditor position and thus reduce the emphasis placed on the considerations mentioned above. There is also a risk that the banks and guarantee funds will exploit this creditor relationship to reduce their own contribution to resolving a crisis. This problem is of less concern in Norway today than during the banking crisis. First, Norges Bank’s loans to banks are almost negligible. Second, collateral requirements apply to all the standard lending facilities. The role of lender of last resort is not clearly defined. The central bank shall ensure financial stability, but in order to ensure that institutions do not take support for granted, there must be uncertainty as to what type of situation would trigger the role of lender of last resort and the instruments that would be BIS Review 124/1999  6  used. This is often referred to as constructive ambiguity.

More than four-fifths of that assessment rests on the extent of non-traditional non-insurance activities in a firm’s business model and on its interconnectedness to the wider financial system. Nine firms have been designated. It is vital that these systemic insurers, like systemic banks or financial market infrastructure, can be resolved in the event of failure without the need for taxpayer support and without disruption of the wider financial system. That’s why the development of resolution plans is a top priority. Nonetheless, given the externalities from the failure of a systemic insurer, it is of course preferable that their probability of failure is lower. That’s why systemic insurers will be subject to higher global standards. The Higher Loss Absorbency requirements, being developed now by the IAIS, will ensure that all of the activities of a systemic insurance group – but especially non-traditional, noninsurance activities – are backed with an appropriate minimum level of capital resources. Given the patchwork of capital standards across major jurisdictions, the first step towards applying these heightened resilience requirements is the development of the Basic Capital Requirement – an internationally comparable capital measure that will act as the baseline for additional resilience. Last week in Cairns, the FSB approved the final BCR proposal which will be presented to G20 Leaders at the Brisbane summit in November. It is simple and factor-based, contains a common valuation approach, and captures all activities of insurance groups.
Third, the votes on the MPC are transparent, and hence members can be held accountable. The merit of individual accountability is that each individual in the group has a genuine incentive to reach a good decision. This aspect leads us directly into my second question. 2. Second, does it matter that there are differences of view among Committee members? From the outset, commentators have been unable to resist labelling members of the Committee as either ‘hawks’ or ‘doves’. I have argued before that it makes no sense to use these descriptions because each member of the Committee has the same objective. Members of the MPC cannot entertain closet views about their desired inflation rate because they will be held personally accountable for their judgments about the level of interest rates necessary to meet the mandated inflation target. As circumstances change, it is easy to imagine that ‘hawks’ shall be ‘doves’ and ‘doves’ shall be ‘hawks’. But that is not to say that differences of opinion do not, and should not, exist amongst committee members. If part of the reason for the improvement of groups over individuals is their pooling of knowledge, then differences of opinion during the discussion that takes place at each MPC meeting should be central to the Committee’s performance. As The Economist put it back in 1998 (when there 4 were only eight serving members): 4  Economist, 18 April 1998, p. 28.

To be an international currency does not take much. You just need to lower the barriers and allow for it to be traded outside your borders. The Malaysian ringgit was an international currency before we de-internationalised it during the Asian Financial Crisis. At its peak, the ringgit accounted for about 18% of Malaysia’s trade settlements, which was significant given the high trade orientation of the Malaysian economy. However, what we learnt from the crisis in 1997 was that for our small open economy, the internationalisation of the ringgit was inconsistent with maintaining macroeconomic and financial stability, and the benefits were not commensurate with the risks. China is not a small economy but like Malaysia it is a developing economy. Therefore, it is not immune to the types of vulnerabilities an international currency and the accompanying open capital account can create in its immature economy with its immature financial system. The rapid momentum of the current RMB internationalisation reflects China’s strong position in global trade. However, it also reflects a safe phase of RMB internationalisation. It is comparable to wading in shallow water, where you can see the bottom of the sea, anticipate what hazards may lie on the sea floor, and therefore are able to walk rapidly. The real difficult part is when you get into deeper waters, where the risks are less visible, the waves are higher, the resistance of the water stronger. Progress can then be expected to be slower and more cautious.
These are strong signals that dictate forceful action to safeguard against inflation. 2/6  BIS - Central bankers' speeches  Medium to longer term challenges of monetary policy Of course, it is normal to assume that when the extraordinary impact of the pandemic and the war fades away in the longer term, production and inflation levels and volatility are likely to fall. However, there are compelling reasons to suggest that policymakers will face a less favourable environment in the medium term, one in which shocks are likely to be stronger, more lasting, and more widespread. 1. Climate change & green transition Climate change is one of the reasons. As we have seen, the frequency and intensity of extreme weather patterns are increasing dramatically, leaving the world economy vulnerable to higher volatility, in economic activity and inflation. The European Union, like many other regions of the world, has experienced droughts this summer. In addition, severe shortages of gas, especially in Europe, may necessitate severe changes to production and consumption in the coming months. In the long run, the move to greener technologies will alleviate such constraints, but it will also expand the types of energy shocks throughout the shift. Unquestionably, such profound changes to our economies' structures provide new possibilities. For example, a committed battle against climate change strengthens the prospects of long-term growth sustainability. Nevertheless, the long and difficult transition period is expected to produce greater, more regular, and longer-lasting economic disruptions in the coming years.

Before recommending the establishment of the Federal Reserve System - a plan which it described as “essentially an American system, scientific in its methods, and democratic in its control” - the Commission produced 22 volumes on the monetary and banking systems elsewhere, especially in Europe. Copies of these volumes sit proudly in the Governor’s anteroom in the Bank of England. The authors noted that “the important place which the Bank of England holds in the financial world is due to the wisdom of the men who have controlled its operations and not to any legislative enactments”. But they did not see the Bank of England as a model, and they recommended the creation of an institution framed by legislation. It would be ninety years before Britain finally learnt the lessons of the National Monetary Commission and passed legislation to buttress whatever wisdom the Bank could command. Institutions embody accumulated wisdom and experience, and they should not be meddled with lightly. From time to time, however, it is necessary to rethink the role of our institutions. The changes made to the Bank of England in recent years, including an inflation target and a high degree of transparency, have, I believe, improved Britain’s monetary arrangements. Whether either the men and women or the current institutional arrangements of the Bank of England will have any more success in influencing monetary arrangements in the United States today than in 1908 is a matter I leave to you.
Last year trade growth lagged the growth of global activity, and current global export PMIs now signal a contraction in global trade (Chart 11). Chart 11: Trade growth has weakened notably 56  Diffusion Index, 50 = no change  Percentage change on a year ago  55 54 53  Global manufacturing PMI: New export orders (6 month lead, LHS)  7 6  CPB world trade volume (3 month MA, RHS)  5 4  52  3  51  2  50  1  49 48  0  47  -1  46 2011  -2 2012  2013  2014  2015  2016  2017  2018  2019  Sources: CPB,Markit Economics and Bank calculations. Bank of England simulations suggest that the impact through direct trade channels of the narrow, bilateral tariffs already announced would tend to be small and would be largely confined to the countries directly involved. A larger increase in tariffs of 10 percentage points between the US and all of its trading partners could take 2½ per cent off US output and 1 per cent off global output through trade channels alone, although the impact on the UK is smaller reflecting a greater exchange-rate driven boost to net exports. If business confidence and financial conditions are also affected (as recent experience suggests they would be), these impacts could double (Table 2).

17  All speeches are available online at www.bankofengland.co.uk/speeches  17  Table 2: GDP losses from a 10 percentage point increase in tariffs on US trade would be substantial29 GDP impact (peak impact over three year period, %)  US  UK  EA  World (PPP)  Trade war  - 2½  -½  -1  -1¼  Tighter financial conditions  -1  -1  -¾  -½  Greater uncertainty  -½  -¼  -¼  -¼  Permanent tariffs  -¾  0  -½  -½  Total  -5  -1¾  -2¼  - 2½  Notes: Bank calculations. There are signs that concerns about such possibilities are beginning to cascade through economies via reduced investment and demand. Consider the UK as a leading indicator of a nascent global trend. UK business investment has fallen 3.7% over the past year despite the ongoing expansion, high business profitability and accommodative financial conditions. With fundamental uncertainty about future market access, UK investment hasn’t grown since the referendum was called and has dramatically underperformed both history and peers (Charts 12 and 13). Chart 12: The recovery in UK business investment has stalled since the EU referendum  Chart 13: UK business investment growth has fallen below other advanced economies  Indices: peak in GDP = 100 180 Average  Four-quarter growth (%) 20 Range of G7 countries excl.
The decline in inflation seen over the last six months has to a large extent been in line with  BIS Review 16/2004  3  the Riksbank’s previous forecasts. The reason for this is that electricity prices have adjusted downwards as expected. The fact that the expected decline has been confirmed is positive for the inflation outlook since the risk of contagion to other parts of the economy diminishes. These risks have also decreased in that rent agreements at least so far have been concluded at moderate levels. In addition, the inflation outcomes in recent months have been lower than expected for other reasons as well. This is partly due to lower import prices, although domestic underlying inflation is also somewhat lower than previous forecasts. Inflation and monetary policy Permit me now to summarise my view of demand and inflation in the period ahead. It appears that international economic activity is progressing largely as expected. Compared with December, there is perhaps reason to expect marginally stronger activity due mainly to the rapid growth in Asia and the US. Economic developments in Sweden are also essentially following the paths we expected, even if there has been a certain shift between different demand components in that private sector consumption and particularly exports are growing slightly faster, while growth in local government consumption will probably be somewhat weaker. In all, there is still reason to expect GDP growth in the years ahead to be somewhat higher than what the Riksbank believes to be sustainable in the long term.

Lars Heikensten: Economic recovery with low inflationary pressure Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at a meeting at Residenset Härnösand, 15 March 2004. *  *  *  Allow me to begin by thanking you for your invitation to today’s meeting. In order to get an idea of economic developments in different areas of Sweden and to explain how the Riksbank works, I pay regular visits to various parts of the country. The items on the agenda for today’s visit include a talk at Mid Sweden University on how the Riksbank works, a visit to SCA and a discussion with county representatives about developments in business and the labour market in Västernorrland. At this lunch, I intend to give my views on the economic situation and monetary policy. Before going into the economic assessment itself, however, I would like to say a few words about the Riksbank’s work methods. One of the Riksbank’s objectives is to maintain price stability. We have decided to define this as 2 per cent inflation as measured by the consumer price index, with a tolerance range of plus/minus 1 percentage point. Monetary policy is conducted on the basis of a forecast of inflation over primarily the coming two years. If the forecast in this perspective indicates that inflation will be lower than 2 per cent, the repo rate should normally be cut and vice versa.
On the contrary, countries that have in the past undertaken consolidation measures as part of a comprehensive reform agenda have fared best both in terms of boosting growth and sound public finances. These countries (e.g. Ireland in the late 1980s and Spain and some others in the mid-1990s) have benefited from strong supply-side effects on growth and – rather quickly – from the confidence effects of reform, which mitigated the adverse demand effects of fiscal consolidation. 15 So, given this evidence, if euro area countries are to benefit fully from the globalisation process, attaining sound public finances is a prerequisite. Concluding remarks Let me now conclude, in what is going to be my last public speech as a member of the Executive Board of the European Central Bank. By coincidence, – on 8 May 1998 –, just before the beginning of my mandate at the ECB , I gave a speech in Vienna at that year conference organised by the OeNB (title of the speech: Welche geldpolitische Strategie für die EZB?). I am again back in Vienna at the end of my mandate. Distinguished economists have often criticised the very concept of European Monetary Union, mainly because the Member States in question did not fulfil optimum currency area criteria, having for example a low degree of labour mobility, inflexible real wages as well as sharp differences in commodity prices and segmented financial markets.

Amidst all of this, the ECB has guided inflation expectations consistent with price stability and thus provided a reliable anchor for the euro area economy, while the euro has sheltered euro area financial markets against those shocks. Indeed, long-term forward break-even inflation rates – which measure inflation expectations and the corresponding inflation risk premium over a horizon in the more distant future – have remained remarkably stable in recent years in the euro area, at a level only moderately above 2% and thus only slightly above comparable survey expectations (see Chart 7). This indicates that the ECB has been very successful in firmly anchoring long-term inflation expectations at a level consistent with its definition of price stability that is below 2% over the medium term. Chart 7: Implied forward break-even inflation Chart 8: Correlation of weekly changes in 10-year rates and comparable Consensus Economics nominal and index-linked government bond yields inflation expectations and break-even inflation rates between the euro area and the US (% p.a. ; five-day moving averages of daily data (12-week moving averages: Jul. 2002 to Apr. 2006) (BEIRs): Jan. 2005 to Apr. 2006)  Sources: Reuters, Consensus Economics, ECB Sources: Reuters, ECB calculations. calculations. As pointed out by Malcom Knight, extracting “clean” information about domestic economic developments from financial market indicators in a more globalised world has undoubtedly become much more arduous. However, the break-even inflation rate (i.e. the yield differential between conventional nominal and inflation-linked bonds) predominantly reflects market expectations of domestic inflationary trends.