samchain/econo-pairs-v1 huggingface dataset:
Important issues on the political agenda in the future will be how the Nordic welfare model should be renewed to make it both economically and socially sustainable. Will we once again be able to serve as a model for other countries during the change that the whole of Europe now faces? Regardless of the chosen model, our demographic situation will require measures that result in a higher average number of hours worked, a larger number of workers e.g. pensioners, and an increase in immigration. This assumes that we want to keep or enhance our welfare system. 1  4  Swedish Association of Local Authorities, "Aktuellt om äldreomsorgen" (Current trends in geriatric care), October 2003. BIS Review 46/2003  Productivity growth can help When the long-term growth rate receives little or no contribution from the labour supply, dependency on labour productivity increases. Compared with other countries, Sweden has thus far performed well in terms of productivity growth. During the 1990s productivity has risen by 2 per cent per year or slightly more. This is a clear improvement on the 1980s when productivity growth was around 1 per cent per year, and even more so compared with the 1970s when the trend was actually negative. So it is productivity rather than the labour supply that has fuelled growth in recent years. This also applies to the other Nordic countries, al-though the labour supply has made a bigger contribution than in Sweden. The particularly steep rise in labour productivity during the 1990s was due to several factors.

One important factor was that many low-productivity firms went bankrupt in connection with the sharp economic slowdown at the beginning of the 1990s, while other firms implemented cutbacks of lowskilled labour that had less qualified tasks. When the economy began to grow again there was plenty of unemployed labour, and it was possible to attain high growth without inflation gathering pace. Another cause was the IT boom towards the end of the 1990s, which also contributed to productivity growth. In the years ahead, we can also expect to have good productivity growth in Sweden. Increases in productivity growth can be a solution for large parts of the corporate sector, but this is less often the case for parts of the public sector. Quality care and education often require a strong presence of human labour. Nevertheless, there is probably much to be gained by organising and financing the public sector in new ways. The contribution made by trade union organisations in this regard could prove to be a decisive success factor. Here, the Nordic countries have an advantage over others through a high degree of organisation and an established cooperation between employers and employees. The education sector also faces considerable challenges. When the current generation of teachers in Sweden retire, a substantial increase in new teachers will be needed. According to the National Labour Market Board, the number of new recruitments required to replace retired teachers is forecast to come to around 100,000 up to and including 2015.
Chile)  1.8 1.4 -0.6 9.3 7.9 4.2 4.5  2.3 -0.5 1.9 7.7 5.6 3.5 2.8  2.2 -0.6 2.0 7.8 4.9 3.8 2.8  1.9 -0.3 0.5 8.0 6.6 4.3 3.3  1.9 -0.4 1.1 8.1 6.3 4.3 3.3  2.3 1.2 0.9 8.2 6.4 4.7 3.7  2.5 1.3 1.3 8.2 6.4 4.7 3.7  LME copper price $ Brent oil price $  400 111  361 112  361 112  (levels) 340 350 105 108  350 100  340 101  Terms of trade  -0.6  -5.0  -4.1  1.3  -1,6  (annual change, percent) -0,8  -0.4  (e) Estimate. (f) Forecast. Sources: Central Bank of Chile based on a sample of investment banks, Consensus Forecasts, IMF and statistics bureaus of respective countries.

The copper price trend is forecast to slope downward, because of a larger response of supply than in previous years, but it is revised up in 2013, incorporating actual first-quarter figures. Thus, the baseline scenario assumes that the terms of trade will be slightly higher than foreseen last December (table 1). In the baseline scenario, GDP growth will be in the 4.5%–5.5% range in 2013, exceeding December projections. The revision is partly explained by stronger growth foreseen in the mining industry, as revealed by incoming indicators. It also considers that the external impulse the Chilean economy will be receiving from abroad will be somewhat stronger, in line with upward revisions to growth of our trading partners and terms of trade. Domestic demand growth, because of both its dynamism of the end of 2012 and partial indicators of early 2013, is also corrected upward, to 6.1% (5.7% in December). Annual growth in investment and consumption is up from earlier projections, bringing the current account deficit to 4.4% of GDP in 2013, compared with 4.6% forecast in December. In any case, the path of domestic demand and investment assumes variation rates declining in the coming quarters (table 2). Y-o-y inflation will remain low in the short term, still affected by the specific factors that have influenced recent indicators. As they dissipate, CPI inflation will start to rise, reaching 2% by mid-year.
If a non-European country wanted to help Europe, there is the question of whether it should send the money to the IMF or use it to purchase EFSF bonds, a senior tranche of the SPV, or the peripheral countries’ debt, i.e. with no intermediation. The many uncertainties associated with the specific operation of the EFSF are giving rise to general doubts about the appropriateness of the current approaches to overcoming the ongoing debt crisis in the euro area. I cannot help feeling that many solutions to the problems have been wrongly chosen in part because the main causes of the financial and debt crisis have not been correctly identified. Greece gets too much attention from decision- and policy-makers. It represents a mere 1/50 of the European economy. I believe that without the political will to provide Greece with massive support from European funds to restore its competitiveness – and I see little such will at the moment – its exit from the euro area will be inevitable, since depreciation of the Greek currency will become part of the measures to restore competitiveness. The provision of loans to Greece has so far primarily bought time. This has enabled wealthier Greeks to transfer their savings out of the country. The costs of such action have been a reduction in Europe’s credibility and harm to the reputation of the International Monetary Fund and its ability to raise funds outside Europe.

To fund these purchases, private capital will be needed (e.g. in the form of senior tranches of SPV debt). Therefore, this project lacks the firm official commitment which similar central bank (BoE, Fed) programmes not reliant on private investor participation have. 5. The latest uncertainty is the adjustment of the entire EFSF project to the loss of France’s (and Austria’s) AAA rating from S&P, followed by the downgrading of the EFSF’s own rating from AAA to AA+. In its comments on this change, S&P stated explicitly that the EFSF’s rating has a developing outlook, which means that the agency foresees the possibility both of returning the rating to AAA (if offsetting credit enhancements are adopted) and of downgrading it further to below AA+ (if key guarantor countries are downgraded). A lower EFSF rating would probably be associated with higher interest costs of refinancing. There might even be a fall in liquidity in the EFSF bond market owing to the exit of some institutional investors, who primarily target the AAA segment of issuers. 6. On a more general level, the lack of coordination of resources for supporting European countries is disturbing. It is resulting in fragmentation of resources and a lack of transparency in the setting of parameters such as “who”, “how much”, “to whom” and “how”. Specifically, the European Union, or the euro area, is planning simultaneously to lend to the International Monetary Fund, to guarantee the EFSF and to guarantee the ESM, while central banks guarantee the capital of the ECB.
So, a drop in house prices probably would lead to a gradual cutback in spending, giving the Fed time to respond by lowering short-term interest rates and keeping the economy steady. Now let’s complicate things. Suppose house prices started falling because bond and mortgage interest rates started rising as the conundrum was resolved, say, because the risk premium in bonds rose due to concerns about federal budget deficits or other factors. Then we’d have the cutback in spending because of the wealth effect, plus there’d likely be further spending cutbacks, as borrowing costs for households rose. Furthermore, a rise in long-term rates would have effects beyond just households—it also would dampen business investment in capital goods through a higher cost of capital. How manageable would this scenario be? Like the wealth effect, these added interest-rate effects operate with a lag, so, again, there probably would be time for monetary policy to respond by lowering short-term interest rates. This obviously would not be a “slam dunk,” but in many circumstances it would seem manageable. A matter of more concern is whether this scenario would lead to financial disruptions that could cause spending to slow sharply and quickly. One issue that receives a lot of attention is the increasing use of potentially riskier types of loans, like variable rate and interest-only loans that may make borrowers and lenders vulnerable to a fall in house prices or increase in interest rates.

In this case, the “what if” question might be, “What’s the likely effect if national house prices did fall by 25 percent, enough to bring the price-to-rent ratio back to its historical average?” Before going any further, I want to emphasize that I’m not making any predictions about house price movements, but instead, simply discussing how a prudent monetary policymaker could assess the risk. First, there would be an effect on consumers’ wealth. With housing wealth nearing $ trillion today, such a drop in house prices would extinguish about $ trillion of household wealth—equal to about 38 percent of GDP. Standard estimates suggest that for each dollar of wealth lost, households tend to cut back on spending by around 3½ cents. This amounts to a decrease in consumer spending of about 1¼ percent of GDP. To get some perspective on how big the effect would be, it’s worth comparing it with the stock market decline that began in early 2000. In that episode, the extinction of wealth was much greater—stock market wealth fell by $ trillion from March 2000 to the end of 2002. This suggests that if house prices were to drop by 25 percent, the impact on the economy might be about half what it was when the stock market turned down a few years ago. Moreover, the spending pullback wouldn’t happen all of a sudden. Wealth effects—positive or negative—tend to affect spending with fairly long lags.
Private projections are consistent with this scenario of lower inflation throughout the projection horizon (figure 8). This projection is based on the assumption that, on average, output gaps will be closed throughout the projection horizon, and that the propagation of specific price shocks will continue to match the historic average, as it has in recent months. As for monetary policy, forecasts use as a working assumption that the monetary policy rate will follow a path comparable to the one that can be inferred from several expectation indicators (figure 9). As usual, there are risks that may cause the macroeconomic scenario described here to deviate from projections. On this occasion, the Board estimates that the risk balance for inflation and output is unbiased. Although milder than in March, one important risk is the persistence and propagation of the specific price shocks of the past few quarters. While fairly stable commodity prices are assumed for external markets, a scenario of higher prices significantly affecting local inflation because of the current status of output gaps cannot be ruled out. The labor market is showing important strength, with the rate of unemployment in low levels by historic standards and a substantial increase in employment, while various sources of information speak of the difficulties in hiring skilled labor in some regions and economic sectors. The y-o-y increase in wages is up from end-of 2010 (figure 10). However, the combination of increased employment, higher wages and stronger economic growth has allowed unit labor costs to vary in line with the inflation target.

14  BIS central bankers’ speeches  Figure 14 Gross capital inflows and outflows (1) (percentage of GDP) Chile (2)  Emerging economies (3)  20  20  8  8  15  15  6  6  10  10  5  5  4  4  0  0  2  2  -5  -5  0  0  -10  -10  -2  -2  -15  -15 -4  -4  -20  -20 -6  -6  90  94  98  02  06  90  10  94  98  02  06  10  Gross portfolio inflows & debt Net flows  Gross inflows  Gross portfolio inflows and debt  (1) Annual flows. (2) 2011 figures show annual flows accumulated up to first quarter. (3) Simple average of: Brazil, Colombia, Indonesia, Malaysia, Mexico, Peru, the Philippines, South Korea, Thailand and Turkey. 2010 figures show annual flows accumulated up to third quarter 2010. Sources: Central Bank of Chile and International Monetary Fund. Figure 15 Currency mismatches (1) (2) (percentage of total assets) 6  6  3  3  0  0  -3  -3  -6  -6  06.IV  07.II  07.IV  08.II  Tradable  08.IV  09.II  09.IV  Non tradable  Total  10.II  10.IV  (1) Liabilities in dollars minus assets in dollars, minus net derivatives position.
This means that every person employed in the construction industry is providing a declining contribution to GDP, in relative terms. During most of the 1990s this difference increased, but it has recovered somewhat in recent years. This can perhaps be partly explained by the fact that there is still a large manual element that it is neither desirable nor possible to eliminate. At the same time, it is probable that the entire industry has a lower degree of rationalisation than other industries. This is also visible in the development of prices for both construction services and building materials, which is far above other industrial products, despite a relatively weak demand (OH 3 development of prices for building materials). There is  BIS Review 32/2002  5  something unhealthy in an industry where wages and prices rise despite a relatively weak demand and lingering unemployment in the industry as a whole. Let me conclude by saying that a recover in the Swedish economy is under way and that the Swedish economy has a good foundation on which to build, with a surplus in both our public finances and in Sweden’s international trade. Inflation is hopefully on the way down. At the same time, wage formation and pricing behaviour in general comprise an element of uncertainty as economic activity begins to pick up. Personally, I consider that this indicates a possibility that further interest rate hikes will be necessary in future.

Although only 26% of the oil produced in Africa was used locally in 2003, energy consumption increased by 44% in Northern African countries (ADB and UNEP, 2003). However energy consumption of liquid fuels comes at a cost. The carbon dioxide (CO2) pollution as a result of energy consumption in Africa was approximately 3.5% of the global emission of CO2, (UNEP, 2003). Growth in demand in the fishing sector has ultimately resulted in the threat of the sustainability of particular coastal and marine populations. To-date the per capita fish catch worldwide has remained static since 1972, however, this measure for Southern Africa has declined significantly (UNEP 2003). Globalisation has resulted in the specialisation of economies in areas in which they have a comparative advantage. The prevalence of cheaper labour costs has led African countries to primarily move towards the role of producing goods in labour intensive sectors such as agriculture and mining. The demand for cash crop exports from African countries by the developed world has equally soared. However the use of pesticides in cash crop production in order to maintain certain international standards has the potential to reduce soil quality due to toxic residue build up. Future population growth, expansion in the agricultural sector, and general economic expansion in Africa will see heightened competition for water resources among these sectors. Competition for water resources between households, industry, and agriculture is expected to increase in future, as currently 25% of the population is living in areas already facing severe water stress (UNEP, 2003).
It is not sustainable in the long term to have a wage development that entails the cost of labour increasing more than the value of the goods and services produced. This means that real wage costs can only increase at the same rate as productivity growth. The stronger the growth in productivity, the higher the wage costs can be without triggering inflation, as long as they take into account any reduction in working hours and other secondary wage costs. The basis for this reasoning is that the economy is in balance, which is characterised by, for instance, stable wage shares and profit shares. Profit shares - profits as a percentage of value added - have fluctuated around 30 per cent for the entire economy. Since 1995, real wage costs have risen more quickly than productivity growth and wage shares. This is not sustainable in the long run. It is necessary, in the long term, for wage shares and profit shares to be at a level where profitability in Sweden is on a par with our competitors to safeguard a level of capital formation and employment that will best promote the development of our welfare. 2  BIS Review 7/2003  A couple of different approaches/rules of thumb are used in the wage formation debate to evaluate the scope for wage increases in the long term, or to estimate a "wage cost norm".

This is no easy task in the present situation. The labour market is quite different today than it was 5-10 years ago. Unemployment is relatively low and there is a labour shortage in some parts of the economy, despite the slowdown in economic activity. Moreover, there are tendencies towards demands for compensation, which, if they were to spread, could provide further complications for wage formation. The trends with regard to labour supply are also worrying. Demographical developments, such as an increasing number of elderly people over the coming decade, will create a demand for more employees to work in geriatric care, for instance. At the same time, the number of persons available on the labour market is declining. An addition problem is the high frequency of absence due to sickness. It is evident that a central target for economic policy should be to get more people in work. This would facilitate wage formation and create greater scope for economic growth in future. This is perhaps just as important a theme for a hearing in the Committee on Finance as wage formation in itself. It concerns measures that are largely in the hands of the Riksdag. Thank you!
From a central banker’s standpoint, the role of asset prices in general and of inflation-indexed bonds in particular in the process of setting monetary policy is mainly related to their information content on future economic activity and inflation. As you have already probably noticed, the Governing Council of the ECB sometimes refers to the information delivered by the changes in the inflation-indexed bond yields both in its introductory statement and in its comprehensive assessment of recent economic and financial developments, as presented, for instance, in the ECB’s Monthly Bulletin. To elaborate further on this, I will develop three points. First, I will describe the information content of inflation-indexed bonds and explain why this information is relevant for central banks. Second, I will highlight some of the main drawbacks and potential biases that may alter this information content. Third, I will briefly review the other indicator variables that we also use in our cross-checking exercise at the euro area level. Finally, I will conclude my presentation by raising the issue of what I call the  1  Robert Shiller: “The Invention of Inflation - Indexed Bonds in Early America”, NBER Working Paper N°10183, December 2003. 2  In the year prior to the introduction of the indexed bond, the inflation rate was at 69.2% in Brazil, 22.2% in Chile, 19.7% in Colombia, 34.8% in Argentina, 16,1% in the UK in 1974 and still at 14% in 1980.

Challenges Maintaining macroeconomic stability is critical to sustaining economic growth in Zambia. The challenge is how to sustain stability and mitigate falling domestic demand within the constraints posed by increasingly scarcer external financial inflows. This has to be done in the context of implementing policies consistent with medium-term stability and development goals. The second challenge relates to mitigation of the vulnerability of the Zambian economy to the adverse external shocks. We will have to closely monitor capital flows and adopt supervisory policies that will ensure a sound and stable financial system. The pursuit of policies that promote macroeconomic stability is also important to ensure that the domestic economy remains attractive to both domestic and foreign investors for the long-term growth and development of the economy. One of the unfolding lessons of the current crisis is the need for greater transparency in the transactions players in the financial markets undertake, particularly, with respect to offbalance sheet transactions. We will therefore be acting to ensure that market players provide us with detailed information on their transactions. In addition, we will continue to work towards strengthening and developing our financial markets as well as encouraging competition and efficiency. Prospects for 2009 and beyond Your Excellencies, going forward, it remains important to accelerate diversification of the economy as a way to mitigate the effects of a prolonged global financial crisis. Currently, there are enormous business opportunities which still lie unexploited in Zambia in virtually all sectors of the economy.