samchain/econo-pairs-v1 huggingface dataset:
Other important events that affected Zambia’s economic development in her early stages of nationhood included: (i)  The pronouncement of the Unilateral Declaration of Independence (UDI) by the Ian Smith regime in the then Southern Rhodesia (now Zimbabwe). The declaration of UDI had both positive and negative impacts on the Zambian economy, although the negative effects outweighed the positive gains. The positive gains relate, mainly, to the relocation of industries from Southern Rhodesia (now Zimbabwe) to Zambia to avoid being affected by the sanctions imposed by the International Community, as a result of the declaration of UDI in 1965. This contributed to the growth of the Zambian manufacturing sector and the increase in employment levels. However, the declaration of UDI had serious adverse effects on the blossoming Zambian economy. As you may recall, at independence, the economies of Southern Rhodesia (now  BIS Review 5/2005  1  Zimbabwe) and our economy were intertwined. Southern Rhodesia was Zambia’s biggest trading partner as well as the main supply route to the sea. The severing of trading, commercial and transportation relations with Southern Rhodesia on account of UDI therefore, meant that Zambia had to invest heavily in her own transportation infrastructure, which finally led to the construction of the TAZAMA oil pipeline, Indeni refinery, TAZARA, the Great North Road (which used to be known as the Hell Run), etc., in order to transport her essential imports and exports. These were huge projects whose construction required enormous borrowing from countries like China, Italy, France, etc.

All this has resembled at times an economics version of Big Brother; indeed I expect the viewing economics community will ask next for the right, through a telephone poll, to vote members off the Committee! Occasionally the differences of view that surface in the Committee arise from different views about the workings of some economic relationship; on other occasions they represent a difference in tactical views. There is more than one interest rate path which would give an inflation profile consistent with the target. And so there can be differences between those who might at any moment prefer to wait and see - recognising that this might require a sharper movement in interest rates later on - and those who might prefer a more pre-emptive activist approach to setting rates, what might be termed the Macbeth School of Economics: “If it were done when ‘tis done, then ‘t’were well it were done quickly”. The fact that there are different paths to achieve the 2.5% target is one reason why there is no automatic link between our inflation forecast, which we publish on a quarterly basis, and that month’s interest rate decision. I mentioned that the setting of interest rates requires one to peer into the future. Unfortunately it is more difficult than that. It also requires policy makers to have a view about what is happening currently.
We know more specifically that the outcome firms view most negatively is that the UK leaves the EU without a deal or any agreed transition period. What the economics tell you is that it’s likely to be nervousness about these worst-case outcomes specifically that are deterring new investments, at least among businesses in the traded sector of the economy. 5  There’s quite enough Greek here already so I haven’t included the derivation in this talk: details are available on request. I say “all” these models but this result rests on the assumption that it doesn’t take long to implement an investment and to start earning a return on it. If instead you think it requires a significant “time to build” the potential upside risks could matter for the investment decision. There’s some incentive in that case to having the investment in place by the time the news is revealed, and the decision will depend on both L and G. See, for example, Bar-Ilan and Strange (1996). 7 The toy model here, with only two possible ways in which the uncertainty can be resolved, is as simple as it could be. But the “Bad News Principle” applies more generally, including in cases where there’s a continuum of possible outcomes. Boyarchenko and Levendorskii (2007) give a good description (see in particular section 1.3 for a brief summary). Dixit and Pindyck (1994) is a more readable account of the general approach.

Yet growth in new investment has been falling, and in the past year or so has turned negative. To me this suggests that even the rise in the profitability we’ve seen has not been enough to compensate for the increase in the risk premium that’s been occurring in the background. And if you take seriously the crude estimates we’ve just been through, you might expect that to have had a significant effect on productivity growth. A brief summary Let me try and sum up. Business investment fell in every quarter last year and surveys suggest the underlying trend is still negative. This is remarkable at a time when profits are high, when the economy’s not been in recession and when employment has been growing strongly. A plausible explanation is that rising uncertainty has acted like an extra hurdle on the required rate of return for new capital projects, deterring expansion in productive capacity and encouraging firms to meet new demand with labour instead. The economics tells us that, because such spending is costly to reverse, perceived downside risks to future profits can act as a powerful disincentive to  12  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  12  new investment projects. If something’s easier to get into than out of, you naturally worry about what might subsequently go wrong. Those perceptions may have been worsening for some time. The evidence suggests that we’ve been living with a high risk premium on new investment for several years.
Given that in the long run the nominal interest rate is the real equilibrium interest rate plus expected inflation, a fall in the latter implies lower average nominal rates, causing them to collide with their lower bound more often. This entails less headroom to provide stimulus in recessions with low inflation, further lowering inflation expectations, and so it continues. In this setting of historically low natural rates, a loss of interest rate policy scope and deanchoring risk for inflation expectations, the main central banks have deemed it necessary to rethink their monetary policy strategy, i.e. how they structure their monetary policy targets and how they pursue them with the tools available. To date, within their strategic frameworks most central banks have followed variants of what is known as inflation targeting, whereby they target inflation running close to a precise numerical value — e.g. 2% — over the medium term. 5  See, for example, Brunnermeier and Koby (2018) for a discussion of the effect of interest rates on bank profitability and their ability to lend. 6 Arce et al. (2018) estimate that these negative rates do not necessarily tighten the credit supply of European — or, in particular, Spanish — banks. 8  Yet alternative monetary policy strategies exist whereby a central bank attempts to make up for past deviations of inflation from its target. These are the so-called make-up strategies.7 One of them is known as price-level targeting. In this case, the central bank announces a target price-level growth rate, e.g. 2%.

To begin with, the Federal Reserve is among the most transparent of central banks in disclosing the specifics of its market operations, including the data reported under the requirements of the Dodd-Frank Act. Details about foreign exchange transactions and foreign exchange investment operations are reported in the  11  Primary dealers are expected to bid in every auction for, at a minimum, an amount of securities representing their pro rata share of the offered amount. That share, currently 1/22nd, is based on the number of primary dealers at the time of the auction. 12  Stephen V. O. Clarke, Central Bank Cooperation 1924–31 (New York: Federal Reserve Bank of New York, 1967), pp. 162, 175–76, 205, and 209. BIS central bankers’ speeches  5  quarterly foreign exchange reports released to the public by the New York Fed. In addition, summary information about all operations appears on the weekly Federal Reserve balance sheet, which is available on the Board’s website. The Desk posts comprehensive results of all domestic open market operations with primary dealers and expanded counterparties to the New York Fed’s public website within a few minutes of the operations’ completion. Results of Treasury auctions are likewise released to the public within a few minutes of the close of competitive bidding and contain considerable detail regarding participation by primary dealers and both direct and indirect bidders. Such reporting by the Treasury exhibits a high level of transparency relative to foreign treasuries’ reporting.
In the year to November, total household borrowing rose 4%, and consumer credit rose over 10%, the fastest rate since 2005. How household spending evolves, and the inter-temporal trade-off that households strike, will be important considerations over the next year. The MPC will continue to monitor these dynamics. In November, the MPC reiterated that we were choosing a period of somewhat higher consumer price inflation in exchange for a more modest increase in unemployment. But it also noted that there are limits to the extent to which above-target inflation can be tolerated. Those limits depend on the cause of the inflation overshoot, the extent of second-round effects on inflation expectations and domestic costs, the scale of the shortfall in economic activity below potential, and any risks around the development of imbalances that could threaten a sustainable return of inflation to the target. Recently, there have been signs of continued solid consumer momentum domestically and a stronger growth outlook globally. The MPC will monitor developments in the light of its inflation tolerance, and will explain its assessment and policy stance accordingly. 16  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches  16  It remains the case that the outlook for inflation will depend on the evolution of the prospects for demand, supply and the exchange rate. Monetary policy can respond, in either direction, to changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target. 7.

Within limits, it has tolerated periods of above-target inflation in order to support the real economy, while at all times respecting the primacy of the inflation target. That said, it is important not to over-interpret these results. Specifically, the MPC’s average revealed lambda in the past does not reveal a simple monetary rule that can govern decisions regarding inflation control in all scenarios in the future. I stress this point because some have suggested monetary policy ought to follow, or be evaluated against, a simple rule, such as a Taylor (1993) rule. 21  But it is important to recall that, while such rules were estimates  of actual stances of past policy – positive descriptions of central bank behaviour – they have been reinterpreted as guides for what the central bank should do in all circumstances – normative prescriptions. Taking the past as a strict guide to the future is to assume that the nature shocks does not change and that the structure of the economy remains constant. Such stability is hard to square in an era of financial crises; deep, variable technological change; and potentially large shifts in openness. In a changing world, monetary policy decisions would more properly emerge from optimal control approaches to monetary policy, which respect the different nature of shocks and circumstances which the monetary authority must weigh in setting its strategy.
With a couple of taps I can hail a cab, and monitor my home CCTV, or buy any number of goods from across the world, which might, in the not too distant future, be delivered to my doorstep by a flying drone. Given how extensively technology has altered our world today, being technology savvy has become a crucial requirement for risk managers today. In what seems like a blink of an eye, companies like Uber, Waze and Airbnb which barely existed a decade ago have become household names. Now valued in the billions, they are a source of income for thousands of people across the globe, and are shaping our modern economy in a myriad of ways. Technological savviness is crucial for two reasons. First, technology can be harnessed to improve business operations and enhance risk management. Secondly, it allows us to quickly identify and respond to new sources of risks emanating from technological developments. The potential of technology in risk management is vast, not only for the automation of tasks, but increasingly as a tool for making business decisions as well. The application of big data analytics and artificial intelligence to assess and predict human behaviour, for instance, can provide great value to businesses in terms of reducing risks. In the motor insurance sector for example, General Motors Assurance in the US has been utilising mileage and driving behaviours captured through in-vehicle telecommunication devices.

BIS Review 97/2008  1  Meeting challenges – people and values There is no magic formula for meeting the challenges I have just outlined. Rather, as always, the fundamentals boil down to having the right people with the right values. In the 2007 Insurance Banana Skins survey conducted by UK’s Centre for the Study of Financial Innovation (CSFI), the quality of talent was cited as one of the key risks facing the global life insurance industry. I am therefore pleased that GE Life is using the FICS framework to proactively develop talent for the company. As for values, I understand that GE Life embraces the 3 core values of integrity, initiative and involvement. In the spirit of this commemorative year, allow me to borrow your values framework to illustrate its relevance to the industry as a whole. Integrity First, integrity. Integrity is the foundation of trust, and for the insurance industry with a longterm relationship, this is crucial. Even as more complex insurance products are being introduced in the market, insurance intermediaries have a duty to ensure that consumers are only offered products they can understand and find suitable. Any undesirable sales practice such as churning and inappropriate switching will undermine the reputation of the insurance industry, and also affect its ability to attract good quality talent. Intermediaries must therefore uphold the highest standards of integrity, professionalism and exemplary business conduct, and ensure that any advice given is fair, objective and in the best interest of the client.
And this is why, as I have said many times, I believe there is a strong case for governance of structural reforms to be exercised jointly at the euro area level: to help each country to achieve the necessary level of resilience; and to ensure that they maintain that resilience permanently. 4 Since structural reforms in any euro area country are a legitimate interest of the whole union, there needs to be stronger ownership of reforms not just at the national level, but at the European level as well. Several countries have however made significant progress with structural reforms during the crisis, and we can already see how this has altered the relationship between inflation and unemployment. Various estimates of the euro area Phillips curve show that, while the slope has varied over time, it has steepened in recent years. In particular, there is evidence that inflation has become increasingly responsive to cyclical conditions in countries that have reformed their product and labour markets, such as Spain 5 and Italy 6. Raising potential growth Besides this issue of resilience, as the central bank of the euro area we also have another, equally direct interest in structural reforms. This is related to their effect on growth – or more specifically, the challenges posed by a period of low potential growth. International institutions currently estimate potential growth to be below 1% in the euro area, compared with above 2% in the US (Chart 3).

Finally, low potential growth can have a direct impact on the tools available to monetary policy, as it increases the likelihood that the central bank runs into the lower bound and has to resort recurrently to unconventional policies to meet its mandate. The euro area’s weak long-term performance also provides an opportunity. Since many economies are distant from the frontier of best practice, the gains from structural reforms are easier to achieve and the potential magnitude of those gains is greater. There is a large untapped potential in the euro area for substantially higher output, employment and welfare. And the fact that monetary policy is today at the lower bound, and the recovery still fragile, is not, as some argue, a reason for reforms to be delayed. This is because the short-term costs and benefits of reforms depend critically on how they are implemented. If structural reforms are credible, their positive effects can be felt quickly even in a weak demand environment. The same is true if the type of reforms is carefully chosen. And our accommodative monetary policy means that the benefits of reforms will materialise faster, creating the ideal conditions for them to succeed. It is the combination of these demand and supply policies that will deliver lasting stability and prosperity. ***  In every press conference since I became ECB President, I have ended the introductory statement with a call to accelerate structural reforms in Europe.
As can be seen in this graph, the Spanish construction workers had to face a sharp contraction of the share of employment in that sector, from 13% of total employment to 5% and find a job in other sectors. The decline is less significant but still relevant in countries which experienced a construction boom. More generally, according to a Banque de France research paper 2, the Beveridge curve has shifted in the euro area and the United States, with more vacancies associated with a similar level of unemployment, pointing at an increase in structural unemployment. These effects of the crisis on human capital would fade away only slowly, with the arrival of new cohorts on the labour market. However, they could be mitigated by active labour market policies, such as an appropriate training policy, which have a very effective and targeted impact on human capital depreciation. 1.2. Second, in Europe, the ECB has significantly loosened monetary policy in recent years even after the limits of conventional monetary policy have been reached. But this has been no ordinary recession. It has also been associated with an acute financial crisis and history has shown that recessions associated with financial crises can have an even longer lasting impact on economic performance. During financial crises, credit constraints can tighten drastically for banks and for firms and households which in turn harms physical capital and labour productivity growth. Financing constraints may lead to increased firm defaults.

There is a term for it – mutualism, describing a mutually beneficial relationship between living things. And let me explain why I am talking about biology in a financial forum to begin with. 3. I have always longed to find an appropriate way to describe the financial relationship between Hong Kong and the Mainland. In my view, Hong Kong’s dynamic with the Mainland is truly unique in that it is a dynamic which no other pair in the world shares. In the financial world, our win is their win and their win is ours. As financial competition amongst the world’s hubs continues, Hong Kong and the Mainland have long enjoyed a mutually beneficial relationship. Sounds familiar? Yes, perhaps neither of us are exactly the same as a bee or a flower, but Hong Kong and the Mainland share a very similar dynamic as them in the financial world – one of mutual benefit. RMB internationalisation: Hong Kong stands out 4. And that brings me to the topic that I want to discuss in more detail today, which is the internationalisation of the RMB. With the continuing growth of the Mainland economy and its increasing financial integration with global markets, it is natural that RMB will be increasingly used in international transactions. The 14th Five-Year Plan has made clear that promoting RMB internationalisation should be conducted in a prudent manner, based on a marketdriven approach. 5.
We have already discussed these in detail on many occasions, therefore today I will dwell only on the amendments introduced to the bills to be considered by the State Duma in the second reading. As regards proportional regulation, I would like to return to the promotion of competition. When we first proposed the concept, many small banks voiced concerns that they might face tougher competition. We took this concern very seriously and have held many discussions on the matter. However, we do not think that the three-tier system disrupts competition. Instead, it will boost the stability of banks - irrespective of their size - and result in more realistic business models in the future. In addition, the system not only imposes restrictions on operations, but also considerably eases regulatory burden for banks holding basic licences. Banks holding basic licences will have to comply with only five required ratios and will not have to meet new highly technical standards. Along with two capital adequacy ratios, one current liquidity ratio and two credit concentration ratios will be applied. The current version of the bill, though aiming to focus small banks on servicing small businesses and individuals, provides a more flexible mechanism and allows lending to larger borrowers if they comply with both a more strictly concentrated ratio of credit risk per borrower and the related party risk ratio. We took these comments into account after the dialogue and discussion with the banking community. We believe that the niche we are establishing for banking will be popular among investors.

This will make possible clearer, more transparent and, consequently, more interesting banking business for new private investors. No less important is the fact that we are creating a system which will help banks chose their development strategy as to how to turn a small banking business into a large one, while avoiding risks to its stability. A few words about the development of a new resolution mechanism. The existing credit resolution mechanism is not only more expensive and time-consuming than that which has been proposed, but it also hampers the competitive environment. Today, a bank operating under this resolution may not comply with the ratios, but nevertheless carry out the same operations as a normally operating bank, meanwhile a turnaround manager obtains access to almost free benefits. Turnaround managers fiercely competed for this credit resource exactly because it gave them a considerable competitive advantage. We do not think that the new mechanism will trigger significant growth in resolutions. Resolution means that the state takes up losses incurred by previous bank owners, thus this mechanism should be applied with caution. 3/4  BIS central bankers' speeches  We call the new instrument the Banking Sector Consolidation Fund, because we expect that banks under resolution will be able to be united into banks with larger capital, which will then attract more investors. We consider it important to encourage growth in the number of banks with large capital to avoid excessive concentration in any one level of the banking system.