samchain/econo-pairs-v1 huggingface dataset:
The results from a study of the IMF (REO – Europe, November 2019) on a sample of EA 15+3 and the NMSs reveals “that all these factors suggest that it is unlikely that the recent increase in wage growth will meaningfully spur inflation in the near term”. These findings support the need for monetary policy in many European countries to remain accommodative for a longer period, but at the same time being vigilant as the “prolonged period of accommodative financial conditions may have created an environment conducive to greater risk taking”. Inflation in the region has been above the average compared with the inflation in the euro area, reflecting the convergence process, the greater exposure to shocks in primary commodities prices, and country specific factors. Yet, the overall inflation dynamics mimics the one in the euro area, given the tight trade linkages. The average headline inflation rate in the CESEE region in 2003 – 2012 period averaged around 4%, while the euro area inflation gravitated around 2%. In the last six years, a suppression of inflation rate was visible across the board, and in both regions (CESEE and euro area) it averaged around 1%. Some reversal to 2% is observed in the last two years, but it is debated how sustainable the pickup in prices is. Very similar is the pattern of the core inflation, which started decelerating in 2013, averaging around 1%, with converging dynamics in the CESEE and the euro area.

We have tried to transpose these challenges to the countries in the region, as in some of them economic boundaries for the monetary policy are lesser compared to the ECB, given positive policy rates. Our simple analysis shows that financial vulnerabilities, observed through the leverage of the public and private sector, seem to be contained, despite the loose financial conditions. Sovereign  17  debt has decreased in the last couple of years, indicating that countries use the benign financial conditions for creating more fiscal space. Private leverage is well below some of the accepted benchmarks. Yet in many of the countries, given the low interest rate environment, household credits are on a rising path, and potential risks are addressed through macro-prudential measures. Hence, some vigilance is needed, with respect to build-up of financial vulnerabilities, though they seem to be much lesser in the region compared to the more advanced economies. Inflation dynamics and its drivers seem to resemble those in the euro area, asking for more profound scrutiny of prices, before proceeding with monetary loosening. At the current juncture, it seems that despite the monetary policy space which exists in part of the region, further policy cuts should be carefully calibrated and considered in the context of country specific assessment of future financial and inflation risks. References: 1. Aleksandra Riedi “Household debt in CESEE economies: a joint look at macro- and micro-level data”, Focus on European Economic Integration, 2019, issue Q1/19. 2. Bank of Spain. 2019.
This means that movements in the Libor that are not in line with the SNB’s monetary policy objectives have to be countered with a change in repo rates. Thus, over the course of the turbulence, we consistently offset changes in Libor risk premia with changes in the repo rate, as shown in chart 4. For this reason, the Libor remained in the middle of the target band during the whole episode. The Swiss franc Libor was much more stable during the turmoil than the Libor for other currencies. This simply means that we were able to protect the Swiss economy from part of the crisis-induced increase in risk premia. Libor criticised Recently, some market observers have questioned the information value of the Libor. The Libor for all major currencies is fixed daily in London by the British Bankers Association  2  BIS Review 80/2008  (BBA) on the basis of a survey of top-rated international banks. Critics argued that some banks would report unduly low Libor rates, in an effort to talk up their creditworthiness. Others claimed that the rates were too high because the panel of reporting banks was not sufficiently representative. These criticisms almost exclusively concerned the dollar Libor. The BBA has found no evidence of a systematic distortion of the Libor, and has announced that it is leaving the fixing method for the Libor unchanged. However, it will strengthen governance of the Libor fixing process, especially the monitoring of individual banks’ reports.

The job is to promote a financial system that can serve households and businesses not just in the good times, but also in the bad.3  The financial system of 2007 was totally unable to do that. It was too weak. Banks, in particular, had too little of their own capital on the line. As the UK and world economies turned down, major UK banks faced losses of £ But they had only £ of their own money – their shareholder capital – on the line.4 So as losses mounted, banks buckled. Credit was crunched, bringing the economy to its knees. And because there was no way to deal with failing banks without harming their depositors and the economy, the taxpayer was forced to step in with a bailout of more than £ So it’s not surprising that our efforts focussed initially on fixing these fault lines in the system. A resolution regime for dealing with failing banks is in place and banks are much stronger. They now have three times as much of their own capital on the line for the risk they take when they make a loan or a trade. 1  Based on OBR forecasts and ONS data. Financial crises often lead to a long run reduction in GDP, with a persistent decline in output relative to pre-crisis trends.
However, price developments are uncertain even six months to a year ahead. There was thus a possibility that inflation could fall even lower than projected, and be more than one percentage point below target. As from May 2003, core inflation (measured by the CPI-ATE) has been more than one percentage point below target. Average core inflation in 2003 is now projected at 1¼ per cent. The difference between the outcome and the projection thus proved nevertheless to be unusually wide, largely reflecting the fact that the economy was exposed to sizeable, unexpected disturbances. Inflation through 2003 has been pushed down in particular by the fall in prices for imported consumer goods. The low rise in imported price inflation is a consequence of the appreciation of the krone throughout 2002 and low inflation abroad. The rise in prices for domestically produced goods and services has also slowed somewhat. This is particularly the case for prices for domestically produced goods influenced by world market prices. Weaker than expected economic developments in 2003 The krone appreciated more in autumn 2002 and at the end of the year than assumed in our projections. This was related to unexpectedly weak developments in the global economy resulting in lower interest rates abroad and a wider interest rate differential between Norway and other countries. 1  A measure of core inflation is the rise in consumer prices adjusted for tax changes and excluding energy products (CPI-ATE).

This is particularly visible in the components that are most sensitive to the cycle and to expectations, such as durable consumption, inventories, and gross fixed capital formation in machinery and equipment. The evolution of indicators of consumers and entrepreneurs’ expectations – IPEC and IMCE – despite a recent small rebound, shows levels below those seen in the few months leading to the crisis (Figure 7). The fall in domestic demand also responds, albeit to a lesser extent, to a cyclical adjustment component. Up to the third quarter of 2008, domestic demand grew at annual rates above 10  BIS Review 65/2009  3  percent during several quarters (Figure 8), driven primarily by investment and durable consumption. Output, meanwhile, was showing clearly lower growth rates, because a significant portion of the demand was deviating to imported goods. The worsening of the financial crisis in the developed markets only sped up and deepened this cyclical adjustment. The drop in domestic demand has been most visible in a fall in imports, limiting the extension of the current account deficit forecast for this year. Accordingly, the impulse of the world economy and the response of domestic demand to the worsened expectations and to the prevailing uncertainty will be negative this year, although partly offset by expansionary monetary and fiscal policies. Because of the connection between our economy’s prospects and the external environment, whatever judgment is made regarding the future pace of global recovery is crucial in the evaluation of our economy and its relevant external environment.
Understanding pay gaps Speech given by Andrew G Haldane Chief Economist Bank of England Co-authors: Zahid Amadxarif, Marilena Angeli and Gabija Zemaityte Joint Bank of England, Federal Reserve Bank and European Central Bank conference on Gender and Career Progression Frankfurt 21 October 2019  The views expressed here are not necessarily those of the Bank of England or the Monetary Policy Committee. I would like to thank Will Abel, Shiv Chowla, Julia Giese, Brian Hallissey, Sam Juthani, Tomas Key, Clare Macallan, Jen Nemeth, Doug Rendle and Ratidzo Starkey for their comments and contributions. This work contains statistical data from ONS which is Crown Copyright. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research datasets which may not exactly reproduce National Statistics aggregates. 1  All speeches are available online at www.bankofengland.co.uk/speeches  Section 1: Introduction “Pay gaps” measure the difference in pay between people with different demographic characteristics doing identical jobs. They are considered to be a good approximation of inequality in workplace rewards (EHRC (2018)). Under the Equality Act 2010, it is against the law to discriminate on the basis of protected personal characteristics. When it comes to pay, this means people should earn the same wage for the same work, irrespective of their gender, race, religion, disability, or other protected characteristics. In other words, no “pay gap” should exist across any of these characteristics.

The Goldin specification is:  (5) ln  ∝  Where  ∗  ∗  =  1 0  female male  We regress the natural log of average gross hourly pay on a binary female coefficient and a set of controls, wider than the ones used in Goldin (2014). The set of controls comprises both individual and job-specific characteristics. It includes: age, female-age group interactions, usual hours worked, public or private sector, full time or part time, contract type, whether born in the UK, has a child under 2, female and child under 2  26  All speeches are available online at www.bankofengland.co.uk/speeches  26  interaction, occupation, female and occupation interaction, educational qualifications, tenure, region of home and sector (Annex Table 1A).11 Once we take account of these factors, Table 2 suggests that there was, on average, a conditional gender pay gap of just under -15% between 1994 and 2019.12 This gender pay gap is highly statistically significant. To understand how it has changed over time, we split the sample into five periods (1994-1998, 1999-2003, 2004-2008, 2009-2013, 2014-2019) and re-estimate (5). As Chart 22 shows, the gender pay gap has fallen over time, though it remains around -10% and is statistically significant by the end. Table 2: Gender pay gap for specification (5)  Female Observations  Coefficient  Pay gap, per cent  Number of observations for females  -0.159***  -15%  291,859  (-11.17) 537,177  Source: ONS Labour Force Survey and Bank of England calculations.
First, it sets out a method for measuring the riskiness of assets. Second, it sets out a definition of capital. And third, it lays down a minimum ratio between capital, the numerator, and risk assets, the denominator, namely that capital should be at least 8% of risk-adjusted assets, with at least 4% of this consisting of Tier 1 capital. What changes will the new Accord make to these elements? BIS Review 70/2000  2  The work has to date been heavily focused on the first element of the framework, the method for measuring risk. There will be substantial changes here, with the aim of introducing more risk sensitivity to the existing crude measures and to widen the coverage of the measures beyond just credit risk and market risk which was addressed in the previous review of the Accord. The direction of the changes was laid out in the Committee’s consultative paper of June last year and I do not intend to go into a description here. On the second aspect, the Committee has stated that “With respect to the definition of regulatory capital, the Committee will maintain at this stage the existing rules set out in the 1988 Accord.” In other words, they will not at this stage be revising their definition of capital. Just to remind you, this definition of capital broadly divided capital into two tiers, of which Tier 1 mainly consists of shareholders equity and reserves and Tier 2 of certain subordinated debt instruments and an element of general provisions.

In order to give appropriate consideration to financial stability aspects, we feel that the SNB should be involved in regulatory procedures at an early stage. In other words, in the conceptual phase. The authorities responsible for issuing financial market regulations should, therefore, be obliged to consult with the SNB early on in the process. Thirdly, the National Bank must have clearly defined decision-making powers with regard to regulations that either bear direct relation to monetary policy or to emergency liquidity assistance. I would like to take two current regulatory proposals to explain more clearly what I mean: the countercyclical capital buffer and the implementation of the TBTF regulations. The countercyclical capital buffer represents a capital requirement that can be adjusted over time. This buffer will be introduced within the framework of Basel III and has the important tasks of protecting the banking sector from the risks posed by excessive lending and of curbing the banking sector’s procyclical behaviour. In the event of excessive growth in lending, the capital requirement can be increased; then when growth in lending is weak, it can be lowered again or even reduced to zero. The countercyclical capital buffer thus has a direct impact on banks’ lending activities and can, as a result, strengthen or weaken the effect of the SNB’s monetary policy significantly. Therefore, whoever determines the level of this buffer also influences the effect of monetary policy.
The root causes of job polarization appear to be technology and globalization, which have displaced many jobs, particularly those involving routine tasks. This loss of jobs has been especially pronounced for what we often think of as traditional middle-skilled workers. Its impact is perhaps most evident in the manufacturing sector, where so many jobs have been lost in recent decades. Given the strong history of manufacturing in our region, job polarization has been an important feature in our local economy. No doubt, the widening wage gap and loss of job opportunities for middle-skilled workers has contributed to a rise in economic inequality and created challenges for many workers and their families. More than ever before, jobs are requiring a greater degree of knowledge and skill. In order to adapt to these changes, it is increasingly important for workers to acquire and upgrade their skills, whether through formal education or other forms of training. In addition, it is important for employers to communicate their needs to educational institutions  BIS central bankers’ speeches  3  so that they can offer the coursework and programs so that people can develop the right skills to fill the available jobs. For these reasons, we think it is particularly important to highlight these trends in today’s briefing. Conclusion In summary, recent data are consistent with the expectation of moderate growth in 2012 and stronger, but still not robust, growth in 2013. I also expect both headline and core inflation rates should moderate over the next few months.

Taking into account the current stance of monetary policy, I anticipate that inflation will decline to slightly below our 2 percent long-run objective over the next few years. So what does this all imply for monetary policy? I currently anticipate that the Federal Reserve’s federal funds rate target will remain exceptionally low – that is at the current level – at least through late 2014. Given our forecast of stable prices and a still slow path back to full employment, there is an argument for easing further. But, unfortunately, our tools have costs associated with them as well as benefits. Thus, we must weigh these costs against the benefits of further action. As long as the U.S. economy continues to grow sufficiently fast to cut into the nation’s unused economic resources at a meaningful pace, I think the benefits from further action are unlikely to exceed the costs. But if the economy were to slow so that we were no longer making material progress toward full employment, the downside risks to growth were to increase sharply, or if deflation risks were to climb materially, then the benefits of further accommodation would increase in my estimation and this could tilt the balance toward additional easing. Under such circumstances, further balance sheet action might be called for. We could choose between further extension of the duration of the Federal Reserve’s existing Treasury portfolio and another large-scale asset purchase program of Treasuries or agency mortgage-backed securities.
Many of you are very knowledgeable about these topics and we hope you will take the opportunity to share your insights on these questions. The GFXC is not only seeking views at the tails, but also those more in the middle of the spectrum as well. Importantly, all perspectives are welcome. Conclusion The request for feedback is an opportunity to engage at an industry level in supporting the resilience of this critical and fundamental market—one that represents far more than the sum of its parts and players. As I said in 2015, 3 “the transactions that take place [in the FX market] are the lifeblood of a global economy that comprises many different national currencies.” At that time, I called upon the industry to take action and I am impressed by what I have seen through the work in developing the Code and in the spirit in which it has been received so far. But that work isn’t over—it never is. Best practices do not work without the ongoing commitment of those in the industry, those making the choices each day. No Code, and in fact no law or regulation, can force all 5/6  BIS central bankers' speeches  participants in a market as broad and diverse as FX to maintain a marketplace that values openness, resilience, high ethical standards, and competition. But, that fact is no reason to forego striving for such a marketplace. Developing the Code has been one way of working toward that goal.

The spectrum of buy side institutions active in FX is particularly complex and varied, encompassing hedge funds, high frequency trading firms, asset managers and corporates among others. The size and complexity of their FX market activities and the nature of those activities may differ significantly. Hearing the viewpoints of many different institutions was critical to delivering a relevant Code for this diverse landscape, recognizing that while the Code applies to all, the details of precisely how it applies may differ. I found that the series of frank debates and discussions that we—market participants and central bankers alike—had over the past two years was an important process in itself, and not just a means to an end. The result was multiple drafts of the Code and, ultimately, a product that more clearly articulated principles and defined terminology. The 55 principles within the Global Code focus on promoting transparency, fairness and mitigating risk across six primary areas–Ethics, Governance, Execution, Information Sharing, Risk Management and Compliance, and Confirmation and Settlement. I would like to highlight a few of these principles to provide a sense of the Code’s content, and use these examples to illustrate some of the fundamental building blocks of a fair, transparent, and efficient market. The Code begins with principles on ethics. The very first principle states that Market Participants should strive for the highest ethical standards. While this is a basic concept, the principle is fundamental and underpins each and every principle that follows.
This could overcome a central difficulty of “lower for longer” strategies – how to make the commitment to delay lift-off credible given its inherent time inconsistency – by “tying the hands” of the policy committee to prevent it from reneging. One option, involving only a modest change to the current framework, is a “whites of their eyes” strategy, in which policy remains on hold until there is clear evidence that inflation has returned sustainably to target. Such an approach could be accommodated within the flexibility of current inflation targeting frameworks, as it would involve trading off somewhat higher inflation in future with lessening the constraint of the ELB today. There could be benefits to changing the remit to recognise explicitly that this is an acceptable use of flexibility. In this regard, the UK’s monetary framework could be well-suited to this strategy as a temporary approach to addressing constraints at the ELB. In particular, the annual confirmation of the MPC’s remit and use of open letters could promote the accountability of the Committee in pursuing this strategy. This underscores the importance of developing measures of core domestically generated inflation to help gauge when inflation has returned sustainably to target, as headline UK inflation can be pushed far from underlying domestic inflationary pressures due to movements in the exchange rate. A stronger variant would be to change temporarily the inflation target objective to build in a bias to stimulate at the lower bound.

In summary, in my view, all these issues underscore the value of a careful deliberate review of the current monetary framework, and the value of today’s research workshop. Conclusion To conclude, the flexibility in the UK monetary policy framework means that the MPC has been able to support the UK economy through the changing of the seasons. Despite the economy being buffeted by diverse and sizable shocks since the recovery began, inflation has averaged 1.7%; GDP growth has generally been robust, averaging around 2%, and above the subdued rate of potential supply growth. The wide margin of spare capacity present after the crisis was absorbed, unemployment is at multi-decade lows and employment at an all-time high. Real wages have finally returned to relatively strong rates of growth. Inflation expectations have remained anchored to the target, even when CPI inflation has temporarily moved away from it. This performance underscores that the bar for changing the regime is high. But it is nonetheless healthy to review it periodically, and that review is supported by the Bank’s active research agenda. Today’s workshop is organised with that in mind, and we appreciate all your contributions to help focus our research efforts. There is an old saying that there is no such thing as bad weather, just inappropriate clothing. With the economic climate changing, let’s ensure that the Bank remains well suited to deliver its mission to maintain price and financial stability in support of the Good of the people of the United Kingdom.