samchain/econo-pairs-v1 huggingface dataset:
There are many self-regulating mechanisms in the economy, but inflation does not regulate itself. The inflation target of 2.5 per cent also provides a framework for the social partners. Over time, nominal wage growth above 2.5 per cent will entail higher real wages and higher purchasing power. Real wage growth that exceeds productivity growth may lead to higher inflation and higher interest rates. In government-financed enterprises, which are often labour-intensive, budgets are adapted to expected wage growth. This is usually in line with assumptions about cost inflation in the economy as a whole and with the inflation target. If wages rise more than this, efficiency must be increased in order to minimise the adverse impact on service production and customers. 2  Calmfors and Driffill (1988): “Bargaining structure, corporatism and macroeconomic performance”, in Economic Policy, April, 14-61 and Driffill (2006): “The Centralization of Wage Bargaining Revisited. What have we learned?” in Journal of Common Market Studies, Vol. 44, no. 4, November, 731-756. BIS Review 122/2007  3  All economic agents can plan ahead on the assumption that inflation will be about 2.5 per cent over time. This is the most valuable contribution Norges Bank can provide the social partners and other economic agents. Thank you for your attention. 4  BIS Review 122/2007  BIS Review 122/2007  5  6  BIS Review 122/2007  BIS Review 122/2007  7  8  BIS Review 122/2007

The typical community college engages with more than 100 employers, spanning a broad range of industries, including healthcare, manufacturing, utilities, and tourism, just to name a few. It is also quite common for community colleges to actively assess local labor market needs, often with the help of local employers. As part of these engagement efforts, employers provide a wide range of education and training support to community colleges, offer various forms of work experience, and help students prepare for the job market. Employer engagement is a promising and important undertaking for community colleges, local employers, students, and workers. Investing in America’s Workforce These are just a few examples of the work being done across the Federal Reserve System and beyond, which is one of the reasons we have come together under the Investing in America’s Workforce umbrella. This initiative started in 2017 as a way to identify new approaches, opportunities, and challenges in the various areas of workforce development. Led by the Federal Reserve System alongside other educational and nonprofit institutions, Investing in America’s 2/3  BIS central bankers' speeches  Workforce has encompassed 52 regional meetings held across the country last year, a capstone conference held in Austin, TX last October, and a three-volume book highlighting workforce development efforts as investments for economic and community growth, which the Fed and our partners are releasing today.
Companies have acted to repair balance sheets following the excesses of the late 1990s, and may conceivably have built a cushion of financial assets to support them through a period of uncertainty as they adjust to the new competitive forces associated with globalisation. But the UK corporate sector stands out as having employed its surplus in ‘cash’ to a far greater extent than its G7 peers (Chart 6). The IMF hypothesise 1 that this may have been motivated by a desire to accumulate a precautionary pot of liquid savings for managing pension fund deficits. I do not know whether or not that is so. For example, the build up of deposits has been concentrated in a few sectors: real estate, and business services, and it is not obvious that these sectors have big pension fund deficits (Chart 7). But that pensions have been a material component in firms’ cash management is not in doubt. That is apparent in the share of gross corporate savings accounted for by employers’ contributions to pension funds (Chart 8). Contributions have tripled – or in real terms doubled – since the late 1990s (Chart 9) 2 . Part of this reflects ‘special’ or ‘one-off’ contributions to reduce deficits. But, judging by selfadministered schemes 3 , regular contributions have doubled (Chart 10). What is going on here? Well, it might have something to do with your management of risk, bearing in mind avoidable and unavoidable sources of uncertainty.

Firms may, therefore, have been reviewing their preferences between risk-taking in their core business and risk-taking via pension provision, and for a while may have been unusually uncertain about how equity markets value those different sources of uncertainty. If so, that may conceivably offer part of the explanation for the measured recovery in UK business investment having been weak, relative to the economy’s total output, compared with past cycles (Charts 11 and 12). Some have suggested that the need to close deficits may have been a factor, via the call on cash flows. The possibility I am airing is that another factor may be the size of a scheme’s discounted liabilities and the prospective volatility of the associated fund’s net value relative to the sponsor’s underlying business and capitalisation. I do not want to push that too far. There have, of course, been other possible explanations for weak fixed-capital expenditure. These include competition from China, India and elsewhere; the rise in oil and commodity prices; and the uncertainty about how both will play out, and thus about prospective demand for UK output. All of this might have been thought to make the external environment unusually risky and so to warrant deferral of investment decisions. Another possible explanation is, simply, that the level of investment has been under-recorded, and that the data will be revised up, as they have been frequently in the past (Chart 13).
Sources: TNS Sifo Prospera and Statistics Sweden  For the Riksbank, this development led us during the spring of 2015 to reduce the Swedish policy rate, the repo rate, to negative levels and to start purchasing government bonds. One purpose of the bond purchases was to push down interest rates on longer maturities. 4 My assessment is that this monetary policy has, on the whole, been successful. The bond purchases seem to have pushed down interest rates more or less in the way we expected. 5 And the monetary policy also seems to have had the intended effect on inflation and inflation expectations. The downward trend has been reversed and both are now on significantly higher levels than at the end of 2014 (see Chart 2). At the same time, the Swedish economy has developed positively, with high growth and falling unemployment. … but the effects on the Riksbank’s finances must nevertheless be taken into account The purpose of the Riksbank’s bond purchases is thus to support the inflation target’s role as nominal anchor for price-setting and wage formation, and thereby to contribute to a positive development in the Swedish economy. How the Riksbank’s financial position is affected is therefore of subordinate, but not negligible, importance. I see at least two reasons to monitor how the Riksbank’s finances develop. First, the Riksbank’s finances are part of public finances. The size of the Riksbank’s profits and losses affect the dividends we can deliver to the government.

The committee is chaired by the Chief Executive of the HKMA and comprises members coming from multiple functions including monetary management, banking supervision, research and macro surveillance. 1/3  BIS central bankers' speeches  6. Some commentators have criticised the HKMA’s macroprudential measures as being ineffective because they have not been able to arrest the rising trend of property prices. This is a misunderstanding of the objective of the HKMA’s macroprudential measures. The objective of the HKMA’s measures is not to tame property prices. Instead, they are aimed at strengthening the risk management of banks and thus safeguarding long-term banking stability. In this regard, it is worth noting that the average LTV ratio of new residential mortgage loans has been consistently lower than 60% while the average debt servicing ratio of new mortgages has been consistently lower than 40%, suggesting that the banking system has built in buffer to safeguard its resilience. 7. Competition dynamics: Mortgage products in Hong Kong are homogeneous, in the sense that from the mortgagor’s perspective it makes little difference which bank is offering the mortgage facility. There is therefore a strong tendency for banks to compete for market share by lowering their underwriting standards. With the macroprudential measures in place, however, banks can compete for mortgage business only in terms of pricing (e.g. mortgage rate). Against a backdrop of rising property prices and a consistently low delinquency rate of mortgage loans, many banks tried to outcompete their peers by pushing down the mortgage rate to record low levels.
Why did we overestimate inflation in our forecasts for those years? To what extent is the fact that inflation has undershot the target due to incorrectly formulated monetary policy, and what effects could this have on unemployment? BIS Review 52/2007  3  Why has inflation undershot the target? Between 1995 and 2006 CPI inflation was on average 1.3 per cent. Measured in terms of UND1X, which is what we normally base our monetary policy on, inflation amounted to an average of 1.7 per cent during the same period. 1 One reason why CPI inflation has been lower than UND1X inflation is that the repo rate has been regularly cut during this period. Regardless of what measure is used, the legal objective of price stability has been achieved. However, inflation has on average undershot the target the Riksbank itself has set. During 2004-2005 inflation deviated substantially from the Riksbank’s target. Some debaters have, as I mentioned at the beginning, claimed that this has to a large degree contributed to the high unemployment in recent years. Of course, it is true that incorrectly formulated monetary policy could lead to unnecessarily high unemployment. But to be able to assess monetary policy in this regard, it is important to first find out why inflation has undershot the target. It is also important to examine what consequences these factors may have had for unemployment, in addition to the effects related to the formulation of monetary policy.

The analyses made of why inflation has been so low in recent years indicate that it is primarily unexpectedly high and lasting growth in productivity that is the explanation and not contractionary monetary policy. 2 One factor that supports this conclusion is that inflation has been low despite demand and growth in the economy being relatively high. But the higher labour productivity has meant that companies have been able to increase their production without needing to raise their prices so much. It would also appear that it has contributed to companies being able to increase production without needing to recruit new staff to a great extent. This may be an explanation to what is referred to in the debate as “jobless growth”. The high productivity growth has also contributed to the Riksbank being able to cut the interest rate to a historically low level. My conclusion is therefore that we have first and foremost overestimated inflation because we have underestimated the strength of productivity growth. Giavazzi and Mishkin observed in their evaluation of monetary policy that this has also applied to most other forecasters. We have therefore not overestimated inflation because we have failed to take into account developments in the labour market. Nor is it because our monetary policy decisions have been unreasonable. This was also noted by Giavazzi and Mishkin in their evaluation. Nevertheless, there is of course reason for the Riksbank to be self-critical. We must become better at understanding the driving forces behind productivity growth.
At the national level, structural reforms therefore remain a priority. We know that structural reforms boost growth: looking at the last 15 to 20 years, euro area countries with sound economic structures at the outset have shown much higher long-term real growth. And we know that they help countries recover more quickly from shocks, which prevents recessions from leaving lasting scars.29 That said, while sound domestic policies are key to protect countries from market pressure, the 6/9  BIS central bankers' speeches  crisis showed that, in certain conditions, they may not be enough. Markets tend to be procyclical and can penalise sovereigns that are perceived to be vulnerable, over and above what may be needed to restore a sustainable fiscal path. And this overshooting can harm growth and ultimately worsen fiscal sustainability. This creates a need for some form of common stabilisation function to prevent countries from diverging too much during crises, as has already been acknowledged with the creation of two European facilities to tackle bad equilibria. One is the ECB’s OMTs, which can be used when there is a threat to euro area price stability and comes with an ESM programme. The other is the ESM itself. But the conditionality attached to its programmes in general also implies procyclical fiscal tightening. So, we need an additional fiscal instrument to maintain convergence during large shocks, without having to over-burden monetary policy. Its aim would be to provide an extra layer of stabilisation, thereby reinforcing confidence in national policies.

In 2012, spreads vis-à-vis German ten-year government bonds reached 500 basis points in Italy and 600 basis points in Spain, with even wider spreads in Greece, Portugal and Ireland. The fifth stage of the crisis then followed: the breakdown in monetary policy transmission across the euro area. Interest rates faced by firms and households in vulnerable countries became 2/9  BIS central bankers' speeches  increasingly divorced from short-term central bank rates. As those economies represented a third of euro area GDP, this posed a profound threat to price stability. The ECB responded with its announcement of Outright Monetary Transactions (OMTs), which restored confidence in sovereign bond markets, helped to repair the monetary policy transmission mechanism, and broke the downward spiral. With less of a direct market impact, but fundamental in confirming to the world the strength of our leaders’ commitment to the euro, was the earlier decision to create the banking union and the European Stability Mechanism (ESM). The long trip back to growth had begun. The unfolding of the euro area crisis yielded lessons for the financial sector, for individual countries and for the union as a whole. But the unifying theme was the inability of each of these actors to effectively absorb shocks. In some cases, because of their weaknesses, they even amplified those shocks. Indeed, banks fuelled the build-up of imbalances and then exacerbated the resulting crash. Countries had too low growth potential, limited flexibility to bounce back from the crisis and too little fiscal space to stabilise their economies.
The other European economic authorities have also reacted forcefully to support the financial system, to safeguard its functioning and to stimulate the various economies. Amid these global difficulties, cooperation and coordination between national authorities, particularly in Europe and in EMU, is today more necessary than ever. Responses based on the adoption of measures designed from an eminently national standpoint are, as in the past, bound to fail. The response to the current difficulties assailing our economies involves more Monetary Union and more European Union. Allow me to conclude by responding to the argument currently being aired in the press on the uneven impact of the crisis in different economies. As I have said, referring to the differentials observed in the past, this problem cannot be resolved by the ECB. It is for governments and national parliaments to adopt the structural reforms I mentioned earlier. Indeed, the crisis should in fact be taken as an opportunity to carry out all these structural reforms. Weak growth potential, competitiveness and productivity problems, the need to find an ideal level of regulation and government intervention, and insufficient goods and labour markets flexibility are, to name but a few, some of the challenges that remain central to the welfare of Europeans and that should, therefore, continue to feature prominently on the political agenda. Beyond the short term, these are the factors that determine the relative economic performance of the various euro area countries.

The average growth rate during these years was just over 3 per cent. This was very different from the average growth we had during the previous ten years. During the transition phase between these periods a number of important changes were implemented regarding the allocation of resources in society. Here I am referring to the deregulation of the financial markets, reforms in the pension, tax and social insurance systems and a reduction in the burden of taxation. In addition, wage formation has been improved, which has probably been facilitated by monetary policy focussing on price stability. It seems to me probable that the return to macroeconomic stability and in particular the structural reforms have actively contributed to the favourable developments of the past decade. On the other hand, I do not believe that the changeover to a floating exchange rate has been crucial in itself. Over the past century Sweden has mostly had a fixed exchange rate and usually shown good growth. At the same time, the past ten-year period has been a special one in terms of the euphoric expectations of the “new economy” connected to telecommunications and IT. This contributed to soaring stock market prices, followed by a fall of historic proportions. History can demonstrate similar episodes. The railway construction in the 19th century gave rise to similar over-optimism, as did the introduction of electric and internal combustion engines at the beginning of the 20th century. Sometimes, these periods of over-optimism have put considerable strain on the financial system.
The firming and intensification of these trends will largely depend on developments in the Spanish economy and on recovery taking root. The outlook for the economy remains favourable; so far, it has proven resilient to an external environment in which growth forecasts for the global economy have been revised downwards, and in which the recovery in European countries – those most important for our economy – has lost momentum. Thus, on the domestic front at least, it would be necessary to embed the reforms under way, thereby enhancing our capacity for recovery. 2  BIS central bankers’ speeches  The start-up of the Single Supervisory Mechanism Among the challenges posed by the SSM is that of attaining quality bank supervision, applying strengthened and uniform standards and making the most use possible of the acquired knowledge of the various national authorities, while setting in place a common supervisory culture. In light of the work undertaken to date and the intense collaboration between the ECB and the national authorities, these goals are realistic. The Banco de España is striving to ensure this is a successful process, cooperating with the ECB and the other SSM participants. We have adapted our organisational arrangements and working methods to smooth interaction with the SSM and the ECB. A further key challenge will be to maintain a level playing field in the member countries, applying uniform supervisory principles. That is a major challenge, given that in Europe there is a wide diversity of banking models and legal systems.

And, this doesn’t begin to capture the full human toll— including the impact on workers who have lost confidence in the future and the poorer health outcomes that occur because of increased stress. For too many individuals in the United States, for instance, the American dream has been put at risk, with parents increasingly pessimistic about whether their children will have the opportunity to do better than they did. We should find better ways to help communities that are struggling because of the effects of free trade. In the United States, we have historically experienced a high degree of geographic labor mobility—much higher than in other advanced economies. The ability to move in search of better opportunities, when possible, has helped to mitigate some of the adverse effects of trade. But, mobility has declined in the United States in recent years, implying that the adjustment costs to trade may have increased. Protectionism Is Not the Answer Given these costs of global integration and more liberalized trade, what is the best path forward? Protectionism can have a siren-like appeal. Viewed narrowly, it may be potentially rewarding to particular segments of the economy in the short term. Viewed more broadly, it would almost certainly be destructive to the economy overall in the long term. Countries need to compete better, not compete less. Trade barriers are a very expensive way to preserve jobs in less competitive or declining industries. They blunt opportunities in export industries and they reduce the affordability of goods and services to households.
This means, in particular, that for some parts of the economy even being too late will feel as though it is too soon. What is certain is that the current expansionary monetary policy cannot be maintained indefinitely without incurring inflation risks. Therefore, households and firms should prepare themselves for a return, sometime in the future, to a world of higher interest rates, with exchange rates being guided by market forces. This is the normal state of affairs, and all concerned should shake off bad habits learned in extraordinary times and remember that they are ultimately responsible for the long-run viability of their decisions and operations. 2. Safer financial system: regulation  It is here that we have most to learn from recent events, and here that we must adapt. There is a lot that could be said. However, I will be modest and confine myself to putting forward three simple ideas that are becoming part of the general consensus, as outlined in the G20 and FSB agendas. Firstly, it should not be a game of us (the central banks, the regulators, the government) versus them (the banks or their managers, the financial sector). What is at stake is the design of an economic system that is efficient, compatible with the rules of a market economy and favourable to value creation. One essential lesson of the financial crisis is that the system was not properly designed.

Christian Noyer: Central bankers’ dilemmas under uncertainty Speech by Mr Christian Noyer, Governor of the Bank of France, at a seminar in Buenos Aires, 5 June 2006. *  *  *  Ladies and gentlemen, •  Thank you for inviting me to this seminar. It is a great pleasure to address such a challenging theme, namely “Central Bankers’ dilemmas under uncertainty”. •  In the first part of my address, I will recall the nature of uncertainty and its importance for the central banker; in the second part, I will sum up proposals for addressing uncertainty. I  The nature of uncertainty  Uncertainty arises in many forms. It is crucial to central bankers in general (I/1) and maybe even more to the Eurosystem (I/2). 1)  The importance of uncertainty for the central banker  The relevance of risks and uncertainty for economic analysis was suggested in 1921, by Frank Knight (Risk, Uncertainty and Profit). “Risk” refers to situations where the decision-maker can assign probabilities to the randomness that he is faced with; “uncertainty” to situations where this randomness cannot be expressed in terms of probabilities. Uncertainty is crucial to central bankers: according to Alan Greenspan, “Uncertainty is not just an important feature of monetary policy; it is the defining characteristic of that landscape”. Thus, I will focus on monetary policy, although the topic is also relevant for financial stability, which is another important issue for central banks.