samchain/econo-pairs-v1 huggingface dataset:
This strongly implies it is not the greater incidence of ideas-fuelled booms after 1750 that accounts for the growth inflexion. The explanation lies instead in the dramatic fall in both the probability and cost of GDP contractions. Recessions have occurred only 30% of the time since 1700 and only 17% of the time since 1900. During these periods, growth has averaged minus 2.2% per year since 1700 and minus 3.4% per year since 1900. Since 1750, recessions have become far less frequent and less painful. It is the avoidance of deep recessions that differentiates the Golden Era from its Malthusian predecessor. Where does this leave our story of growth? Well, the story that better fits the facts appears to be one in which the conveyor belt of ideas and innovation has been continuous over the centuries, causing lengthy if lumpy ideas-fuelled expansions. But whereas prior to the Industrial Revolution this conveyor belt was regularly halted by recessions, more recently these interruptions have been far fewer and less costly. Put differently, the real revolution in living standards after 1750 came about not exclusively, or perhaps even mainly, from the surge in ideas and technologies. Rather, it resulted from societies having found some means of avoiding the subsequent recessionary bullets. Prior to the Industrial Revolution, these killed expansions dead. After it, societies appear to have found some effective means of dodging them. A Second “i” on Growth  To understand growth, then, we need to explain why economies become less recession-prone after 1750.

GDP growth per head of population averaged less than 0.1% per year. Just try and imagine those rates of growth. They meant it took more than a millennium for living standards to double. 1  Stiglitz, Sen and Fitoussi (2009). For example, Coyle (2014). 3 Two recent excellent books (Pinker (2018), Rosling (2018)) chart this and other dramatic improvements in societal well-being over time. 4 De Long (1998). 2  2  All speeches are available online at www.bankofengland.co.uk/speeches  2  This growth experience is likely to have had an important psychological, as well as financial, impact. The average person would not see any improvement in living standards over their lifetime. Their lived experience was imperceptibly different than their parents, grandparents or indeed great, great grandparents. People’s lives were lived on a travellator. Rising living standards was not a social norm. Secular stagnation was. You could argue, with some justification, that measures of GDP at this time might have been missing a trick. We did not have any formal, statistical means of measuring incomes and outputs in the economy until well th  into the 20 century, with the development of the National Accounts. And GDP anyway underplays important factors shaping people’s well-being, such as levels of nutrition, infant mortality and longevity. 5  6  Yet, as best we can tell, alternative well-being metrics tell broadly the same story. Rates of infant mortality were unchanged over this period. Life expectancy flat-lined at 30 to 40 years. Levels of calorific intake stood still.
Figure 3 shows two summarising measures for the deviations between market expectations according to forward rates and the Riksbank’s repo rate forecast at the time of all 18 publications. 7 We can see that the deviations have become larger since the financial crisis erupted, which is natural as uncertainty increases. Looking at the whole period since 2007, however, there does not appear to be any systematic deviation in any direction (the average deviation is approximately zero for the whole period). It is important to point this out. One question that may nevertheless arise is why market expectations deviate from the Riksbank’s forecast. Figure 3 Deviations during the forecasting horizon between the repo rate path and market expectations according to forward rates Percentage points  Note. For a description of the calculations, see footnote 7. Sources: Reuters EcoWin and the Riksbank. 7  The measures show the following: at the time of a given forecast the difference between market expectations and the Riksbank’s forecast for the repo rate 1 to 12 quarters ahead are measured. This thus gives 12 different deviations for each time of publication. One measure gives the average of all 12 deviations. The other measure shows a “standard deviation”, where the sign of the deviation is unimportant. 6  BIS Review 85/2010  …and what are they due to? To begin with, I would like to make the reservation that market expectations cannot be observed, they can only be estimated.

Page 4/10  supervisory measures taken in the aftermath of the 2008 global financial crisis, the capital buffers and liquidity positions of most banks have improved in recent years. Let me conclude this section with two observations. First, crisis resilience requires more than good crisis management skills. Fending off a crisis depends not only on what policymakers do once the crisis has erupted. It also hinges on what has been done to render the financial system as a whole more resilient ahead of a new shock. Second, policy coordination and cohesion matter. Although the SNB has reaffirmed its important role as a crisis manager, monetary policy alone is not a panacea. We mentioned earlier the powerful effect of the concerted efforts of central banks to calm financial markets and instil confidence. The same is true at the national level. The unique nature of the COVID-19 crisis required an unprecedented combination of fiscal and monetary policy. Fiscal policy directly supported households’ and firms’ incomes, while monetary policy supported bank credit provisioning and dealt effectively with the risk of financial market turmoil. The two policy areas complemented each other while remaining within their respective remits. So far, we have discussed how the COVID-19 pandemic shock prompted the SNB to react with a set of timely and targeted policy responses. Let us now turn our attention to a different facet of the COVID-19 pandemic, namely, how it has catalysed digitalisation and what the implications of this development might be for the SNB.
In any case, we stand ready to adjust all of our instruments within our mandate to ensure that inflation returns to our medium-term target and to preserve the smooth functioning of monetary policy transmission. We are now ready to take your questions. *** Six weeks ago you provided a fairly similar guidance in your statement. In the press conference you said there's more ground to cover and the ECB is not pausing. My first question is that, if you have a similar guidance, are you willing to make the same comment in the press conference today? The second is, what lessons do you draw from the Fed's pause? I don't mean that you need to emulate the Fed; clearly, the ECB has its own policy. But I mean the reasons behind the pause, as quite a lot has been done. There needs to be an evaluation of the effects of policy tightening. So, do you see a reason for the ECB to contemplate a similar pause? Is there a risk that focussing on past projection errors could increase the risk of a policy error by the ECB? On your first question, this meeting was the meeting of a Eurosystem projection exercise. So, we have looked very much at data. We have revised our projection. We essentially did what we said we would do: data dependent and using the three elements of our reaction function to determine what was the right decision today. That is the reason why we increased all three rates by 25 basis points.

Its roots in the olden leeuwendaalder or the Dutch lion-thaler show not only its descent from the former Dutch coin (and therefore its being related to the US dollar), but also its European dimension as ever since its birth, shortly after the creation of the modern Romanian state, our leu currency was French. This means that the 1867 Monetary Law was designed in terms of the Latin Union, most of all France. The law stipulated that metal coins should be minted in French style. But our bonds with Europe were broader as the law set forth that the gold and silver coins issued by France, Belgium, Italy and Switzerland (all members of the Latin Union) should be accepted by all exchange houses, along with the Romanian ones. Thus, Romania’s European aspirations were strongly asserted, while spreading to Germany through King Carol I of Hohenzollern, whose effigy was placed on the first Romanian gold and silver coins, and to Spain, Mr. González-Páramo, via its Latin spirit. Ladies and Gentlemen, It is my pleasure to restate here with you what I have often underlined throughout 2010 when we celebrated the NBR’s 130th anniversary since its establishment which made it the 16th central bank in the world in chronological order. The fact is that the history of the Romanian monetary system is closely linked to the history of the modern Romanian state. Feel free to discover this reality by visiting the space dedicated to the leu in the lobby of the Euro Exhibition.
This means macroprudential policy has an increasingly important role. Rightly, the Chinese G20 Presidency has called for G20 members to learn from each other’s experience of macroprudential management. The IMF, FSB and BIS will therefore report to G20 Leaders ahead of the Hangzhou Summit regarding processes to analyse systemic risks; toolkits to address vulnerabilities; and mechanisms for domestic and international coordination. In an increasingly integrated global financial system, this work can help identify areas where we need to work together to keep our systems resilient. It is clear, for example, that strong links exists between asset management in advanced economies and the debt markets relied upon by emerging market corporates. Where appropriate, the FSB will make policy recommendations regarding structural vulnerabilities associated with asset management activities for public consultation before the  14  BIS central bankers’ speeches  Hangzhou Summit. And reinforced by recent experience, the FSB’s second annual report on the effects of reforms will include a comprehensive review of the extent, drivers and likely persistence of any reduction in market liquidity. Whither the G20 Plan for strong, sustainable, balanced growth? Most fundamentally, the G20 needs to use the time purchased by monetary policy to develop a coherent and urgent approach to supply-side policies. Gradualism in structural reforms may be promoting disinflationary expectations, while sapping the political process of its mandate. The weakness of investment not only holds back the supply side but also weighs on the equilibrium interest rate and further burdens monetary policy.

(a) UK Banks are: Barclays, HSBC, LBG, Nationwide, RBS and Santander UK. Table 2 Drivers of UK banks’ lower ROE Total reduction in post-tax return on equity, 2006-H1 2015(a)  -11  Due to reduction in leverage  -4  Due to fall in return on assets  -7  of which:  Net interest income  -4  Trading income and fees  -6  Misconduct costs  -3  Other income and expenses  -4  Impairments  3  Operating expenses  7  Increases due to  Sources: Published accounts, bank data submissions and Bank calculations. (a) UK banks are Barclays, Cooperative Bank, HSBC, Lloyds Banking Group, Nationwide, RBS and Santander UK. More fundamentally, banks are out of favour because of a new-found exasperation with their returns rather than due to old concerns about their resilience. UK banks, for example, have seen a sharp decline in profitability since the crisis, with average group-level post-tax returns on equity falling from 17% in 2006 to 6% in the first half of 2015 (Chart 6). Of course, with hindsight, a substantial proportion of the pre-crisis return  6  BIS central bankers’ speeches  was ephemeral, reliant on short-term funding, capital-light balance sheets and massive synthetic leverage.
The Australian central bank has such a target for its monetary policy: to attain an average inflation rate of between 2 and 3 per cent over the economic cycle. However, the central banks in Canada and the United Kingdom appear to have succeeded well in keeping average inflation close to the inflation target without specifying a target for a longer period. 18 As undershooting the inflation target over a long period of time would appear to have major costs to the real economy in the form of increased average unemployment, it is thus important that monetary policy henceforth is conducted so that average inflation is close to the target over a longer period of time. It is an open question whether this requires some further specification or change to the current inflation target. 17  Swedish government (2012, p. 121, table 5.2). 18  In their evaluation of monetary policy 1995-2005, Giavazzi and Mishkin (2006, p. 77) noted: “However, in recent years the Riksbank has persistently undershot its inflation target; this has been associated with a loss in output and higher unemployment.” They recommended that the Riksbank should ensure that it neither undershoots nor overshoots the inflation target over a long period of time, that is, average inflation should be in line with the target over a longer period of time.

Another route would be to seek to address banks’ perverse incentives via idiosyncratic, riskbased capital requirements; ie active use of Pillar II of the Capital Accord, which is desirable in any case. One can argue that the two routes could be equivalent for the banking system as a whole. In a system of risk-based premia, the ex ante levies on “safe and sound” banks would obviously be lower than those on their riskier peers. In a system of variable capital requirements, the burden on the FSCS and so the ex post levies on the surviving “safe and sound” banks should crystallise less frequently, and perhaps also be smaller, the greater the amount of capital a riskier, failed bank had to carry. But it is not so straightforward. Unlike the US, the UK does not have a regime of “depositor preference”, which means that the FSCS ranks alongside (rather than ahead of) ordinary wholesale creditors and so shares losses with them. The risk-reducing benefits of extra risk-based capital would, therefore, be spread over  3  The FSA Consultation Paper, “Financial Services Compensation Scheme: Review of limits” (CP08/15), estimated that (based on BBA data for two large banks) the share of accounts covered by the increase in deposit insurance from £ to £ would rise from 96% to 98%, while the share of the overall value of deposits insured would rise from 52% to 60%.
One can’t be precise about these things, but I do think that, for reasons on both the demand and supply side, these very rapid rates of wholesale goods-price inflation are likely to subside at some point. Indeed, in some cases they could even go into reverse. When it comes to demand, I think it’s reasonable to expect shifts caused by the pandemic to narrow again as the threat of it recedes. Consumers will rotate some of their spending back to services. To the extent strong demand for durable goods specifically is to make up for ground lost last year that only needs to be done for a while: people buy a new computer or car only once every few years, not every quarter. Indeed there may already be signs – tentative but visible – that these imbalances are beginning to diminish. Retail sales fell in May, in both the US and UK. Spending on Barclaycard doesn’t suggest any reacceleration in June, in this country (Chart 14). It does on the other hand suggest that other areas of spending – those most heavily affected by the lockdowns, like hospitality and restaurants – has been growing faster than that on goods since the economy re-opened in April. Second, supply in some of these goods markets is ultimately quite “elastic”: over time, higher prices encourage higher production, ensuring a degree of self-correction. For some basic commodities the response could be relatively straightforward: it might simply be a question of reopening an existing plant, mine or sawmill.

Philipp Hildebrand: Principles for sound compensation practices Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Economic Outlook 2009 (Unternehmer NW-Schweiz), Basel, 23 April 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  Most financial institutions viewed compensation systems as being largely unrelated to risk management and risk governance prior to the crisis. Short-term profits were rewarded with generous bonuses with little regard to the longer-term risks taken on behalf of the firm to generate those profits. With hindsight, it should therefore be no surprise that these bonuses fueled the excessive risk-taking that has ultimately undermined the global financial system. It is important for the future stability of our financial system that compensation systems be viewed as an integral part of the risk management system in financial firms, and designed and governed with this in mind. The Financial Stability Board (previously the Financial Stability Forum) has drafted a set of sound compensation principles for large financial institutions with exactly this goal in mind. The Principles were endorsed by the G20 leaders at the London summit earlier this month and aim to be widely implemented by the 2009 remuneration round. BIS Review 50/2009  1
The stable path of inflation conceals a decline in the contribution of the energy component, as the impact of the past oil price hike fades, offset by a gradual increase in underlying inflation. Although measures of underlying inflation remain generally muted, they have been increasing from earlier lows. Tighter labour markets and the emergence of wage pressures are expected to continue to bolster underlying inflation. Given the underlying strength of the economy, we are confident that the sustained convergence of inflation to our aim will proceed even after a gradual winding-down of our 1/4  BIS central bankers' speeches  net asset purchases. At the same time, an ample degree of monetary accommodation will still be necessary to ensure a durable convergence of inflation over the medium term. Against this background, we have reduced our net asset purchases to € billion as of this month, and we continue to anticipate that net purchases will terminate by the end of the year.

Since the beginning of the recovery, the number of people employed in the euro area has risen by 9.2 million. Euro area unemployment declined to 8.1% in August, its lowest level in almost ten years. Consumer spending is being driven by steady growth in households’ real disposable income. Strong labour markets – with increasing job creation and rising wages – boost household income and, in turn, consumer spending. The investment outlook remains solid on the back of robust demand, improving profitability and favourable financing conditions. Since the end of 2014, bank lending rates in the euro area have declined significantly, by around 130 basis points for non-financial corporations and by around 110 basis points for households. Lending rates on very small loans, which can be used as a proxy for loans to small and medium-sized enterprises (SMEs), have fallen by more than 210 basis points. This is encouraging, as SMEs provide two-thirds of total private sector employment in the euro area. Overall, the underlying strength of domestic activity in the euro area continues to support a sustained adjustment in inflation. According to the flash estimates, HICP inflation increased to 2.1% in September, from 2.0% in August. On the basis of the latest oil futures prices, headline inflation is expected to hover around the current level for the rest of the year. Our most recent projections foresee annual headline inflation at 1.7% in 2018 and in each of the two subsequent years.
At the monetary policy meeting in July I said that I personally believed that the repo rate would be raised at all three meetings this autumn, especially if the sovereign debt problems looked to be resolved without any major negative effects on the financial markets.1 But so far the management of the sovereign debt problems has not been particularly successful. I will come back to this. New statistics The statistics received during the summer on the Swedish economy are largely in line with the assessments we made in July. However, the international outlook appears weaker, particularly in the United States. The statistics refer mainly to the second quarter and the summer months of this year, and do not actually say very much about the forecasts for the second half of the year and the coming years. 1  2  See the minutes of monetary policy meeting no. 3 2011, Sveriges Riksbank. BIS central bankers’ speeches  Weaker international developments… Since July, we have received preliminary national accounts figures for the second quarter of this year for the United States and the euro area. GDP growth in the United States was 0.3 per cent in the second quarter of this year, measured as a seasonally-adjusted quarterly change. This was slightly lower (0.1 of a percentage point) than we were expecting in July.

An important task here will thus be to assess GDP growth in various parts of the world and what significance it has for the Swedish export market. One of the most difficult questions in this context is to assess how increased uncertainty abroad will affect international developments. Inflation in Sweden is also affected by trade with other countries, for instance, when the prices of goods imported into Sweden are adjusted in the world market. As I have already pointed out, energy and commodity prices have fallen since last spring, which we will also have to take into account in our inflation forecasts. …and via the financial markets The Swedish economy is also affected through the financial markets. Interest rates abroad have fluctuated substantially and this also affects Swedish interest rates. This is clear from the strong covariation between government bond yields in the United States, Germany and Sweden. Developments during the summer have entailed falling interest rates in Sweden, which is in itself positive for growth (see Figure 12). At the same time, share prices have fallen and the stock market is very volatile. Since the Monetary Policy Report was published on 5 July, the Stockholm Stock Exchange has fallen by around 20 per cent until the beginning of this week (see Figure 13). This could mean that  6  BIS central bankers’ speeches  households increase their precautionary saving and that companies postpone investments. We must also take a stance on how this may affect our forecasts.